NUVA brings U.S. residential mortgage credit to offshore investors

NUVA brings U.S. residential mortgage credit to offshore investors

The company's HOME token gives eligible investors exposure to a vault of U.S. home equity lines of credit starting from 1 USDC and targets a 7% annual yield.

NUVA’s HOME token gives eligible non-U.S. investors exposure to a managed pool of Figure-originated U.S. home-equity lines of credit for as little as 1 USDC. The ERC-20 token targets a 7% annual return, reset monthly, while offering withdrawals without a lockup and a first-loss buffer of about 5% of the vault’s value. HOME holders do not own individual loans, and they remain exposed to credit and liquidity risks despite borrower-quality standards, geographic limits and a 5% liquidity reserve.

NUVA, the real-world asset marketplace created by Animoca Brands and Nuva Labs, introduced a token that provides foreign investors exposure to U.S. home-equity loans, starting at as little as 1 USDC.

The token, called HOME, gives holders exposure to a pooled investment vehicle that will initially hold home equity lines of credit (HELOCs) originated through Figure Technology Solutions. NUVA is targeting a 7% annual return from the loans, with the target resetting monthly. Interest income and loan performance are reflected in the vault’s net asset value, which in turn determines the token's price.

HELOCs are a way for homeowners to borrow against the equity they have in their property. The borrowers receive access to a line of credit for a defined period, typically at a variable rate of interest. The value of HELOCs in the U.S. climbed to $460 billion in the second quarter, according to Federal Reserve Economic Data.

HOME does not give holders ownership of individual loans, but exposure to the basket as a whole. The distinction matters because the token takes an asset class usually accessed through securitizations, private-credit funds or whole-loan purchases and puts a managed version of it into decentralized finance (DeFi).

“Traditional securitization was built primarily for institutional investors,” Nuva Labs CEO Anthony Moro said in an interview with CoinDesk. “For individual investors, those structures can be difficult to access.”

Breaking down barriers

HOME is not the first tokenized private-credit product. Maple Finance built onchain lending pools for institutional borrowers, while Centrifuge has been used to bring credit and structured products onchain. Figure itself already tokenizes HELOCs on its Provenance blockchain. HOME differs in how it packages that exposure. Eligible non-U.S. users can enter a managed vault of Figure-originated home-equity loans with 1 USDC, rather than buy whole loans or invest through a conventional private-credit fund.

“HOME holders do not directly own the underlying loans,” said Moro, a former BNY Mellon executive of 22 years. “They hold HOME tokens that provide exposure to the assets held in the vault.”

NUVA has been working to connect Figure-originated assets to public blockchain ecosystems. HOME is a test of whether crypto users want that exposure in a tradable, composable token that conforms to Ethereum's ERC-20 standard rather than in a conventional fund.

Read more: Former BNY exec launches NUVA, bets tokenization will remake Wall Street

NUVA is betting that it can tap decentralized finance (DeFi) demand for yield without having to create demand for the loans themselves. Figure’s consumer-loan marketplace processed $4.3 billion in volume in the second quarter, including $2.8 billion through Figure Connect, where whole-loan buyers and securitization investors purchase loans.

“HOME is not trying to create demand for residential credit from scratch,” Moro said. “It is taking an asset class that already has substantial institutional demand and making that exposure available through a more accessible onchain structure.”

The underlying market is also expanding. U.S. HELOC balances rose by $13 billion in the second quarter, their 17th consecutive quarterly increase, according to the New York Fed.

For non-U.S. users only

HOME will be available only to eligible non-U.S. users. The U.K., Hong Kong, China, British Virgin Islands and sanctioned jurisdictions are also excluded, Moro said. NUVA will enforce the restrictions through wallet screening and IP address blocking.

HOME’s first portfolio will target HELOCs with an average FICO score — a credit score created by Fair Isaac Corporation — of at least 735, a combined loan-to-value of no more than 69%, and a debt-to-income ratio of no more than 40%, Moro said. Exposure to California will be capped at 30%, with other states limited to 15%. Debt-service coverage and residential-transition loans could be added later.

The product offers no lockup, although withdrawals, which can be requested at any time, are expected to take about two U.S. business days. NUVA said a 5% liquidity sleeve will cover smaller redemptions. Larger withdrawals may require loans to be sold through Figure Connect or over the counter.

A separate first-loss equity allotment or segment, estimated to be roughly 5% of the vault’s value, is intended to absorb defaults or losses from forced sales before they reach HOME holders, NUVA’s CEO said. That structure provides a buffer, but does not eliminate the credit and liquidity risks associated with U.S. residential lending, Moro added.

Moro said the aim is to make loan-level data, including collateral, delinquency, borrower-credit and loan-to-value metrics, available onchain rather than confining investors to periodic fund reports.

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