Equity release products offered by companies like REX & Co and Equity Key have received a lot of coverage in the past few months, but it looks like the turmoil in the financial markets is starting to take its toll on these types of products. Last week, REX & Co announced that its REX Agreement isn’t being made available to new applicants at this time but the company remains in business.
The REX Agreement allowed homeowners to receive cash in exchange for a percentage of their homes future appreciation. Over the past year as homeowners struggled to find a way to get cash from the equity in their homes, the REX agreement started to take off. According to a recent article from the Wall Street Journal, REX saw the dollar value of deals completed in the first half of the year rise 20% from all of 2007.
The company’s decision to halt applications could be related to the problems of its largest minority investor American International Group (A.I.G.). Last Wednesday the Federal Reserve Board said that it would provide up to $37.8 billion to A.I.G. to help it deal with a rapidly dwindling supply of cash. This assistance comes after the Federal Reserve extended $85 billion in a bridge loan to the company in September.