Frequently Asked Questions

ReachOption is the newest and one of the most innovative concepts in financial services today. It allows you to reach your dreams now and pay from the future appreciation of your property.

ReachOption provides interest free money by buying an option on your property in return for a portion of the future appreciation of the property. So, you get cash now and pay nothing until you sell or refinance the property.

• Get cash now
• Retain ownership of the property
• Use the cash for any purpose
• NO added debt obligations
• NO monthly payments
• NO interest payments or interest build-up.
• Retain all tax benefits from mortgage interest and real estate tax

ReachOption also shares some of the risk of declining property values.

You do not pay any interest during the term of the contract. If your property does not appreciate in value during the term of ReachOption, at the end of the contract you only pay the amount ReachOption gave you at the inception of the contract. Further, if your property declines in value, ReachOption also shares some of the risk with you, Click Here to see examples.

• ReachOption pays you up to 20% of the fair market value of your property to purchase a 10 year restricted Option Contract; you receive cash and make no payments during the term of the contract.
  • For example: Fair market value is $1,000,000,
  • First mortgage balance $600,000.
  • ReachOption will purchase a $200,000 10 year Option Contract.
  • You pay no interest during the life of the contract.
  • You can terminate ReachOption by repurchasing the Option at any time during the life of the contract (except the first 24 months) by paying a price based on a percentage of appreciation of the property from the inception of the contract.
  • You must repurchase the Option contract when the property is sold, transferred or refinanced by paying ReachOption a price based on a percentage of appreciation of the property from the inception of the contract.
  • If the property decreases in value, you pay no \\\"appreciation share\\\" to ReachOption but you return the amount of money ReachOption paid you at the inception of the Option Contract with no interest, no financing charges.
  • If the property value decreases below the outstanding mortgage amount, you make no payment to ReachOption
  • If you do not repurchase the Option within 10 years or you default, ReachOption as its last resort REACH has the option to purchase the property at 90% of the fair market value at that time, and pay any outstanding mortgage principal and the ReachOption repurchase price from the proceeds.

ReachOption is different from a regular mortgage in that it has no interest, no amortization, and no monthly payments. In fact it is not debt, it is not a mortgage, it is not even a credit product; it is an agreement to share the future appreciation of your property (if any).

• When ReachOption is being used for a new purchase or refinancing; it accompanies a first mortgage. Generally, banks that provide mortgages have loan-to-value (LTV) guidelines. After the 2008 recession banks have become more conservative and reduced their LTV\\\'s to 60% or 70% this in turn reduced the amount of mortgage money they are willing to provide. ReachOption is available to fill this gap and provide funds over and above the first mortgage up to 20% of the value of the property.
• When ReachOption is being used as a Home Equity; it also accompanies a first mortgage. ReachOption can be used to provide you with cash based on the value built up in your property.
• ReachOption can also be used at the time you refinance your property.

You may be eligible for ReachOption if you meet at least the following conditions:

• Your property is a condo in the New York metropolitan area
• You understand that you will share any potential appreciation in the value of your property with ReachOption
• Your first mortgage plus the amount you are receiving from REACH cannot exceed 80% of the current fair market value of the property.
• You have good credit record.

ReachOption is designed to be simple, inexpensive and easy to maintain. All fees that may be due at closing may be deducted from the proceeds from the money you will receive from ReachOption up front; you may pay only the due diligence fee.

ReachOption charges the following fees:

To ReachOption:

• Due Diligence Fee - Paid up front: $450
• ReachOption Fee – Paid at closing: 1% of the amount ($100,000 results in $1,000)
• Attorney - $1,000
• Annual Verification Fee – $950

To other entities, we will provide you with an estimate

• Any first mortgagee fees
• Title Insurance – to Title Insurance Company (will piggyback on recent search if any)
• Appraisal – to 3rd party appraiser (may use recent appraisal if available)
• Recording fees - to government entities

Where is it available?

Currently, ReachOption is only available to Condos in the New York Metropolitan area. You may obtain ReachOption from the following sources:

• Directly through www.reachfinancing.com or www.reachoption.com
• Through selected Mortgage Brokers – Please ask your broker to sign up as a provider
• Through selected Real Estate Agents – Please ask your agent to sign up as a provider
• In selected NYC Condos through the Sponsor

We are busy signing up more providers to make this innovative concept available to more people. Your recommendations are welcomed; please write to us at info@reachfinancing.com.

ReachOption can be used for any purpose, here are some examples:

• Buy a new or larger apartment
• Replace your existing HELOC
• Pay down or pay off your existing mortgage
• Fund college tuition
• Pay for medical expenses
• Renovate your home
• Cover unexpected costs
• Make a charitable gift
• Repay another loan
• Pay outstanding bills
• Pay off your credit card balance

You have several responsibilities to yourself and to ReachOption:

• Read all contract documents carefully and consult your lawyer and tax adviser
• Obtain fee title insurance policy with a fair market value rider (for new purchase only).
• Maintain a homeowner\'s insurance policy with extended replacement cost coverage.
• Maintain the property in good condition.
• Do not make alterations without approval of ReachOption
• Make all your payments related to the property in a timely manner, including
  • Mortgage payments (if you have one)
  • Real estate tax payments
  • Monthly condo common charges
  • Special condo assessments
  • Homeowner\'s insurance

• Do not take any additional liabilities that use the property as collateral (e.g. mortgage, HELOC, etc.)
• You must notify ReachOption in writing within 15 days if:
  • There are any pending changes to the ownership of the property.
  • There are any liens placed on the property.
  • You plan to refinance the first mortgage.
  • You are in default on your mortgage are you are bankruptcy.
  • There are any changes in your employment status.

ReachOption is designed for today\'s busy professionals. The contracting process is simple and approval is quick. Below are the sequential steps of the contracting process:

1. YOU: Fill out and submit the initial Due Diligence Questionnaire on our web site www.reachoption.com
2. WE: respond with initial qualification response via the email address you provide.
3. YOU: Fill out and submit the detailed Due Diligence Questionnaire and disclosure notification on our web site www.reachoption.com and pay the Due Diligence fee.
4. you with copies of our contracts for legal review.
5. YOU: Have the contract reviewed by your legal and tax adviser.
6. WE: Provide you with our determined Fair Market Value (if different than yours) which will act as the Base Value.
7. WE: Provide you with the amount we are willing to pay for the option.
8. YOU: Come to the closing and collect your check (any closing costs that were not paid will be deducted from the proceeds of the contract payment)

The due diligence process is designed to be quick. Generally the process takes 30 days.

Yes, currently ReachOption is available for owner occupied condo\'s and investment properties.

Yes, currently ReachOption is available for owner occupied Condo\'s and Condo\'s to be used for a 2nd home or pied-a-terre.

ReachOption is not a debt instrument and therefore should not impact your first mortgage. If ReachOption proceeds are for a new purchase your bank may not have seen a ReachOption contract before and may not approve of its usage. Please check directly with your bank or mortgage banker/ broker before applying.

ReachOption has a 10 year contract term. At the end of its term you may buy back the option or ReachOptionmay exercise its option to buy the property. The contract term may also end upon the occurrence of one of the following events:

• Transfer, partial transfer, sale, partial sale, abandonment of the property
• Refinance, default, non-payment of first mortgage
• Lien, tax judgment, full or partial impairment of the title
• Non-payment of Real Estate taxes, Condo Common charges and Condo assessments, homeowner insurance premiums
• Non-payment of ReachOption annual verification fee

Yes, you may terminate ReachOption at any time after 24 months by paying back the initial investment plus ReachOption share of the appreciation in the value of the property. The value of the property is determined by independent appraisers. In the first 24 months there is an early contract termination fee.

Yes, absolutely, you still own the condo; you DO NOT transfer it to ReachOption throughout the term of the contract. Moreover, you are still responsible for all your obligations as the owner.

Yes, you still own the condo and all your interest on your first mortgage and any Real Estate Taxes are still deductible from your federal and state taxes just as they were before. ReachOption does not impact your tax deductions. However, as ReachOption has no interest payment therefore there is nothing to deduct for of the ReachOption contract.

No, you may not take additional financing on the property. However, if you have not taken the maximum amount of funds provided by ReachOption, you may apply for additional money from ReachOption.

If you lose your job you do not lose your home as long as you pay your monthly mortgage payments to your bank (if you have a mortgage), Real Estate Taxes, homeowners insurance and any condo fees. As ReachOption does not have any monthly payments, this makes it easier for you. This is one of the key benefits of ReachOption.

Yes, of course it is YOUR property; you can sell it at any time. Upon sale of the property you repay ReachOption its initial investment plus ReachOption share of the appreciation in the value of the property based on the sales price.

At the time you sell, you repurchase the ReachOption contract and termination of contract is filed with the NY County Register. At that point ReachOption gets paid from the proceeds of the sale. There is NO negative amortization, NO accrued interest to pay. However, ReachOption may assert that the sales price is too low and the only right ReachOption has at that point is to buy the property from you at the same net price as your sale contract. You then return the amount of money REACH paid you up front for the Option plus the ReachOption share of the appreciation, if any. How much ReachOption gets paid depends on the sale price:

• If the property has not appreciated in value, you only pay the amount of money ReachOption paid you at the inception of the contract.
• If the property has gone down in value, you only pay the amount of money ReachOption paid you at the inception of the contract. You may even pay less than the initial amount.
• If the value of the property is greater than the first mortgage but less than the amount ReachOption paid you at the inception of the contract, then ReachOption will settle for the amount available, thereby absorbing some of the loss.
• If the value of the property is below the first mortgage then ReachOption will receive nothing and you will owe ReachOption nothing.
• If the property has gone up in value then you pay the ReachOption share and you keep your share.

One additional benefit of ReachOption is that it may save you from mortgage default or the need to file for bankruptcy in the unfortunate case of a significant decline in income or in the value of your property and your equity has eroded. ReachOption may buy your property to protect its investment thus saving you from mortgage default.

At the time of sale or transfer, ReachOption has the right but not the obligation to purchase your property at the net transaction price and terms. ReachOption may take this action in order to protect its investment. You would get the same net amount for your property, except you will have sold or transferred it to ReachOption instead of another buyer.

• In the case of a sale to a bona fide purchaser, the price is set as the net sales price evidenced by a signed contract.
• In the case of default or abandonment, ReachOption may exercise its Option to buy the property at 90% of the fair market value less any expenses and outstanding amounts (including mortgage payments, condo common charges, condo assessments, taxes, etc.). ReachOption may negotiate with the lender to reduce the outstanding amount. This may also have an effect of protecting you from the damages of a default on your mortgage, as ReachOption could assume your responsibilities on your mortgage or pay it off. This feature of ReachOption can be an additional risk protection for you. This is how ReachOption shares the risk of significant decline in your property\'s value with you (as it happened recently in the 2008 recession).

Refinancing terminates the ReachOption contract. At the time of refinancing, you repurchase the ReachOption similar to the sale and transfer described above except the funds would come from the bank or institution that is providing the refinancing instead of the buyer\'s payment to you.

Do I have the right to terminate REACH before the term expires?

Yes, you have the right to terminate your ReachOption contract at any time after the first 24 months. At the time you decide to terminate you repurchase the Option contract. The repurchase price is based on the fair market value of the property at the time of termination.

The Option Repurchase Price is computed in the following manner:

• If the value of the property has increased, then the Option Repurchase Price is the amount of money ReachOption paid you at the inception of the contract plus its % share of appreciation.

• If the value of the property has not increased then the Option Repurchase Price is only the amount of money ReachOption paid you at the inception of the contract.

In the event that you and ReachOption are unable to agree on the Fair Market Value of the Property, ReachOption will order an appraisal from a licensed and accredited appraiser. If either you or ReachOption do not agree with the value set in the initial appraisal, then the disagreeing party may, within 5 days of receipt of the initial appraisal order a second appraisal from a licensed and accredited appraiser. The appraiser that prepared the initial appraisal and the appraiser that prepared the second appraisal then jointly determine the Fair Market Value of the Property. If the two appraisers cannot agree upon the Fair Market Value of the Property, then the two appraisers jointly select a third appraiser. The third appraiser then selects which of the 2 appraisals is closest to the actual fair market value of the Property. The closest appraisal then becomes the Fair Market Value of the Property.

ReachOption is also sharing a portion of the down side risk with you. At the end of term you have to pay ReachOption back the amount it paid you at the inception of the contract. However, if the value of your property declined substantially (below the total of your first mortgage plus ReachOption amount), the amount you return to ReachOption may also be reduced. See examples above.

If you cannot pay your mortgage, real estate taxes, common charges or assessments than you would be in default of the ReachOption contract. REACH may purchase the property pursuant to the default provisions of the contract.

If you default on your mortgage, it is also a default under the ReachOption contract and REACHoptionTM may exercise its option to purchase the property at 90% of fair market value.

Yes, you have to obtain homeowner\'s insurance including coverage for fire and water damage with extended replacement cost coverage. ReachOption will have to be named as a Loss Payee. Please ask your insurance company for available insurance for your property.

If the property is damaged an insurance claim must be made either by the owner, first mortgagee or ReachOption to repair and or restore the damaged property to its original state. The ReachOption contract requires that you repair the property and restore it to its original state; you may not keep the proceeds of the claim and not restore the property. As ReachOption gets paid from the value of the property, this is extremely important for ReachOption to maintain the value of its investment.

Yes, you must purchase a Fee Title Insurance Policy with a Fair Market Value Rider (if a new purchase) and provide a copy to ReachOption

You have the right to terminate the ReachOption contract at any time without a penalty except in the first 24 months. This is so that ReachOption can recover its contract costs. However, due to unforeseen circumstances you must terminate the contract, an early termination penalty of 10% of the amount ReachOption paid you at the inception of the contract plus the percent of appreciation based on the Fair Market Value (FMV) at that time, per the ReachOption contract.

An event of default would be if you failed to pay your current mortgage payment, common charges, assessments, real estate taxes, homeowners insurance premiums, changed the usage of the Condo without prior approval, received secondary financing without approval or if you did not comply with any of the provisions of the contract.

ReachOption can exercise its right to purchase the property at 90% of the Fair Market Value (FMV) at that time. You would also be liable for the expenses REACH incurred by curing the default.

At the end of the ten years when the contract expires one of two events can occur.

ReachOption may extend the contract with new terms OR

• You can exercise your right to repurchase the contract as described above and prevent ReachOption from exercising its option to purchase the property. You would accomplish this by refinancing, selling or otherwise providing your own funds. The Option Repurchase price is determined as described above OR
• If you do not exercise your right to repurchase the contract, ReachOption may exercise its Option to purchase the property by notifying you of its intent. The formula used to calculate the price is: Fair Market Value x 90% minus expenses incurred minus Option Repurchase Price

The Fair Market Value and Option Repurchase Price are calculated the same way as described above.