Home Loan Token Protocol Avalanche Raises $10M in Series A

Homium, a home equity line of credit (HELOC) token protocol built on top of Avalanche, has raised $10 million in Series A funding led by Sorensen Impact Group and Blizzard.

“With Mutual Appreciation Home Equity Loans, Homium introduces a way for homeowners to borrow against their home equity without increasing their monthly debt burden,” Avalanche wrote in an April 15 announcement.

Using home equity, homeowners pledge to lend a portion of their home's future appreciation for repairs and maintenance, debt consolidation, or inheritance. At the same time, investors receive a tokenized asset on the protocol that tracks the price appreciation of condominiums.

“Homeium is building an important new asset class for institutional investors, providing a new source of uncorrelated, inflation-protected returns within their core portfolios,” CEO Tommy Mersey said in a statement. The first such home token loans are available in the US state of Colorado.

Foreclosed properties are backed by second mortgages on owner-occupied single-family homes. Investors in HELOC tokens are protected in the same way as any other mortgage. Homium promises that each home will be provided with a “third-party, hybrid appraisal service” by national lenders.

While HELOC tokens are built on distributed ledger technology, they are not cryptocurrencies. Instead, the tokens are debt securities that comply with Rule 144A of the United States Securities and Exchange Commission (SEC) regarding private placements for institutional investors. Homium explained about the technology:

“Patented technology gives Homeium investors a real-time window into each loan in each pool, including its origination value and current market valuation. Because Homeium loans are underwritten at a consistent rate that ensures the % of underlying home equity, this allows the note to be secured quickly from inception. Investors for Residential Home price appreciation receive joint exposure by state.

Starting July 2023, Avalanche has committed to investing $50 million in on-chain token protocols, with a special focus on real estate and digital collections. Meanwhile, financial services giant Citi recently described the tokenization market as the next “killer use case” in crypto.

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