A shared appreciation mortgage (SAM) allows a lender to charge a below-market periodic interest rate by sharing in the property's sale proceeds at time of sale or upon maturity of the loan. The payment to the lender upon maturity or sale is termed contingent deferred interest. The percentage share of the property's appreciation the lender will receive is established in the loan agreement.
While there have been numerous advocates of SAM home loans, no large-scale program has been implemented. One cause of this is home appreciation is geographically correlated with income and ethnic/racial characteristics; therefore, the loan could be inherently discriminatory. A second cause is typical terms do not return a competitive yield to lenders. In income property lending, however, the SAM idea is used as one form of a "participation" mortgage loan.
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