Property financing in developing countries through asset-backed micro-financing

Asset-backed micro-financing may revolutionize the method in which properties are financed and that the same time utilize the reusable energy sources and decreasing the dependence on traditional depleting resources. It will also making modest, affordable housing accessible to the masses of people in countries like China and India.

This new financial paradigm forgoes traditional mortgages, that rely on credit, and securitizes cash flows generated by a properties’ excess energy that is created from a various forms of reusable energy sources that are part and parcel of the house. The financial model is then left with operational risk of the cash flow, which is found in three major forms; (i) the destruction of the home, which the risk is transferred to an insurance product, (ii) energy resource generator failures risks, which will be mitigated by a world class “preventative maintenance” program that draws experience from many fields proven fields, and finally on the geo-weather condition risks, which will be partially mitigated by weather derivatives and diversification.

This author suggestes that the pre-packaged-based homes that are designed purposely for different geo-weather characteristics of a certain area in a particular country and custom solutions. For instance,  the following package-based homes will be provided: (i) The Solar Primary home, (2) The Costal Primary Home, the Mountain Region Home, and the Plains Primary Home. These packages will combine varies forms of reusable energy generators to optimally fit the region. The energy sources include; Solar, Geo-Thermal, Biomass, Hydro, Wind, and Tidal.

The pre-packaged-based homes that will be naturally deployed in different regions of a country will also reduce geo-weather condition risks as the “network” of properties become larger and more diverse (see Network Science). As traditional energy suppliers like coal and oil burring turbines traditionally have Service Level Agreements (SLA) with the government to ensure the government has power when they require it, or else there will be economic repercussions for the supplier. The author believes that as the network grows and becomes more diversified, the reliability and availability of power will increase and may reach a point that the “network” outperforms naturally any SLA the government has with its suppliers.

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J. Brant Arseneau has a patent pending on this new financial process.