First Fractional Funding opened its doors in May 2006 and specializes exclusively in fractional, or partial interest, funding of properties.

Because First Fractional Funding’s business is not tied to the secondary market, the current market status has had a minimal effect on its business. The company, which is a division of National Bank Of Kansas City, currently services all of its loans rather than selling them once they are funded. And, when considering the First Fractional Funding customer has a higher credit, asset and income profile than the average real estate purchaser, it has more stability in its customer base as well.

“We are fortunate because we have the backing of a stable, FDIC-insured national bank,” Anderson said. “National Bank Of Kansas City’s liquidity has allowed us to increase our staff to meet the demand for fractional mortgages. The concept for fractional ownership has taken off in the last year. It’s becoming more mainstream.”

“We focus on developers;” Anderson said, “those who have heard of us and those who are entertaining the idea of using fractional funding. Many decide to do business with First Fractional Funding because they want to be more efficient in their financing offerings and know that we bring our specialized expertise to the deal.”

The number of people turning to fractional real estate as an option to provide the benefits of owning a luxury second property without having to pay for it when they do not use it continues to rise.

Fractional ownership is different than a time-share. With fractional properties, the owner receives a deed and all the rights of ownership, including some tax deductions. With timeshares, people own a specific number of weeks per year and pay for maintenance of the property. Often they can spend their time at different properties throughout the United States.

Although fractional ownership properties are not a new concept, financing these properties is. In the past, buyers of these hotly-sought-after properties would use a seller-carried loan, second mortgage on their primary home, margin loan on their stock accounts, or cash to pay for their ownership. Because buyers didn’t want to tie up the equity in their primary home, or sell a piece of their stock portfolio, there was a void in the buying process. While fractional funding is growing in popularity, it is not trendy like other loan products, such as option ARMS, Anderson noted.

“This is a win-win situation for everyone involved,” he said. “The developer can generate more revenue from multiple owners and the owners only pay for a portion of the house cost. Furthermore, the communities can enjoy additional sales revenue as more owners dine, shop and spend money in their community.