United States: Free and Clear Foundations of America Prepares To Launch Trillion Dollar Zero Interest Mortgage Market in United States
Last Updated: December 20 2002

The Free and Clear Foundations of America announced that it is reaching out to the global banking industry to jointly develop a potential $1 trillion annual market in zero interest mortgage product originations and funding.

Historically, small banks and savings and loans served local neighborhoods; and the evolution of the mortgage industry from traditional building societies and credit unions that offered low interest financing for housing eventually became dominated by large global banking establishments who could market their securitized collateral mortgage obligations to a much wider investor base.

Smaller institutions were mainly located in local neighborhoods whose loans were closed and then packaged up in portfolios and then sold upstream to larger institutional investors such as the Federal Home Loan Mortgage Corporation, or Freddie Mac and Fannie Mae. More recently traditional mortgage products in the mortgage banking industry have had their rates drop to historic low levels where the Zero Interest Mortgage (ZIM) can now be priced and resold on a very competitive basis.

When global investor demographics changed radically and global finance evolved into a more technological and fast paced service system, banks began to consolidate through the merger and acquisition process, taking with them the capital and financial resources needed to help keep local neighborhoods strong.

Despite the Community Reinvestment Act in the United States and a host of other rules and regulations promulgated by the Department of Housing and Urban development, housing finance is still expensive relative to post World War II levels due to the fact that at least 20% of all homeowners, particularly in America, still spend at least half their incomes on housing costs.

Seeking to reverse this trend, the Foundations which are headquartered in Washington D.C., have established a network of ready and willing volunteers across the world who are prepared to assist in implementing the zero interest mortgage program under what is billed "The Free and Clear America" campaign.

The founders want to demonstrate that institutional investors can still earn substantial profits from the cash flows of such instruments while at the same time helping to build real permanent wealth for individuals and their families.

In 1992, a highly successful mortgage banker first formulated the concept of the ZIM, but mortgage rates over the past decade had been too high to be able to competitively price and market the mortgages and create any solid institutional investor interest.

Together with its affiliates--a real estate development company, a non-profit human service organization, a network of professional lobbyists, and a venture capital company--the Foundations have succeeded in educating enough potential customers and investors to gear up for the launch of this program into the $7 trillion US mortgage market.

The Free and Clear Foundations are seeking to have large global financial institutions act as their master licensing agents for the ZIM product line, as well as coordinate funding, closing, shipping, collections, and management of the secondary market for the products to be franchised to approximately 700,000 mortgage brokers and bankers around the world.

The Free and Clear Foundations have developed a business model to create a global secondary market for the ZIM line, and with the help of the international banking community, and the Community Reinvestment Banking Act Officers (CRO's) in the United States, aims to provide any family that earns less than $500,000 per annum with this program, which accelerates "true home ownership" at less than half the cost of traditional mortgage products.

While the annualized yields on the ZIM product range between 4.9 and 5.2%, and with restrictions on secondary financing, which defeats the purpose of owning a home free and clear in less than a decade, institutional investors, particularly those in jurisdictions with depreciating currencies against the dollar, or rates below current market rates offered through US agency obligations, can take advantage of investing in the product line while actually doing a greater good for a greater number.

Statistically, the default and delinquency rates on traditional mortgages are currently running at 40 year highs and with the continued concern about recovery in the US economic climate, the tip of the housing bubble, and increased corporate bond defaults and bankruptcies, the ZIM product line offers investors increasing and compounding collateral value, while at the same time benefiting the consumer with rapid acceleration of equity buildup in what is traditionally their largest single asset purchase, namely the single family owner occupied home.

The benefits are clear. The borrower repays the cost of the borrowing or refinancing under the ZIM program during the first year. Thereafter there is rapid buildup of true equity for the homeowner and their immediate family. Such costs are amortized over the life of the loan, which are 100 equal payments of principal only. Tax deductions are less than on traditional mortgages which is currently the only drawback for those who itemize their deductions, however a sister organization of the Foundations is working actively to lobby the US congress to change that as well.

The Free and Clear Policy Institute, also in D.C., is drafting a bill, which it hopes will catch the attention of policy makers, budget negotiators and key industry supporters such as the National Association of Realtors, the Home Builders Association and the Mortgage Bankers and Brokers Associations across America.

The Free and Clear Policy Act aims to repeal the mortgage interest deduction on single-family owner occupied housing, while at the same time providing taxpayers with a credit for paying down principal. This would incentivize the ideal of the "American Dream" of home ownership and create enough of a government budget surplus to pay off the $6+ trillion U.S. national debt within a decade.

The extra capital going to the government which is estimated at $300 billion per annum in interest savings alone would, once the national debt is paid in full, result in increased capital available to develop more productive uses of government funds, particularly toward millions of patents for products, technological advances and programs which are under funded or currently completely ignored, especially in the fields of education, social security, and health care. The proposed bill would also pave the way for eventual further tax cuts on capital gains, double taxation of dividends, as well as reduce corporate income taxes in the longer term.

The Free and Clear Foundations are asking the international banking industry to assist it in launching this product, which is estimated to have a market potential of $1 trillion in sales during the first twelve months of operation. The product will conform to Fannie Mae and Freddie Mac underwriting guidelines, be very competitive with traditional mortgage product offerings, and has already generated tremendous interest from the consuming public.

FNM and FRE currently manage approximately $4 trillion in outstanding mortgage debt in the United States through the issuance of mortgage backed securities and their ongoing purchase of mortgages through a national network of mortgage banks and other financial institutions.

In an era of predatory lending practices and abuses in the financial services industry, the ZIM product line offers the greatest possible good for the greatest possible number in each community, and will eventually lead to affordable housing for every family in the world.

The ZIM product line, when launched through licensing agreements to the participating international banks, will provide affordable mortgage financing which rapidly builds equity for the individuals and businesses that utilize the product in their local communities.

The ZIM product will provide additional profit incentives for the international banks from sub servicing rights, origination fees and participation in yield spreads as the product develops through an international secondary market, as well as expanding their potential target market to reach a wider customer base in their own local markets.

In addition, these participating banks which typically provide some sort of non-financial, capacity or market building development services, either directly or through a subsidiary or affiliate, will have the opportunity for cross selling their other product menus to the customer base created by the Foundations.

The Free and Clear Foundations has developed marketing and educational materials relative to accelerating the building of individual net worth using the ZIM product lines, as well as materials on how to obtain a down payment assistance mortgage if a consumer has been unable to save enough money to purchase a home, paving the way for increasing home ownership in America at to 90% of the population. Currently, 70% of all Americans own their own homes through traditional mortgage bank financing according to statistics provided by FNM and FRE.

The Free and Clear Foundations recognizes that the international banking industry continues to grow, consolidate and mature. Working with several trade groups the Foundations are seeking to refine its proposed measures for both financial and development success, particularly to the services available to individual homeowners, throughout the global housing industry.

If you currently act as legal counsel to any large international financial institution and would like to make it possible for it to build upon these good works through participation in the intellectual capital developed and owned by the Foundations for this product, feel free to email freeandclearsocieties@thepennyking.com for a copy of the prospectus.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Recent Content from this Firm
Font Size:
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.