[1] Another program was initiated 2002 as several scholars at Yale University[2] worked in conjunction with a program in Syracuse, NY, which was developed with the intent of increasing home ownership in neighborhoods on the verge of collapse that were marred by ever declining home prices.
In many cases, a local organization would pay the fee for the homeowner if they agreed to live in the home for 3 years.
Any protection contract is essentially providing a hedge to the owner against declining home prices.
The provider (protection seller) of the contract will generally have a significant reserve in place and will also hedge their risk using housing futures from the CBOE Chicago Board Options Exchange & CME Chicago Board of Trade and other real estate short strategies to help mitigate losses.
[5][6] Waiting periods are required in many of the programs to prevent the owner of the home price protection agreement from gaming the system.