Shared Appreciation Mortgage Law and Legal Definition

A Shared Appreciation Mortgage is a mortgage in which the lender agrees to an interest rate lower than the prevailing market rate, in exchange for a share of the appreciated value of the collateral property. The share of the appreciated value is known as the contingent interest. Such an interest is determined and due at the sale of the property or at the termination of the mortgage. By participating in the appreciation of the property, the lender takes an additional risk that is related to its value and depends largely on the conditions of the housing market.