Advice Pool - Real Estate

Piggyback Mortgages are great to avoid paying the monthly Private Mortgage Insurance (PMI) payments wh

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ich are not even tax deductible.

A piggyback is basically nothing more than a second mortgage closed

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

t the same time with the first mortgage in such a way that the share of the first mortgage drops down

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

to 80% of the total loan.

A common formula is 80-10-10 in which 80% is the first, 10

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

is the second (piggyback) mortgage, and the last 10% is the down payment.

In many cases, the piggyba

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ck is provided as a revolving home equity line of credit (HELOC) to pay for the recurring expenses. St

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

dies show that the number of piggyback mortgages has quadrupled since 2000.

However, piggybac

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ks have a couple of drawbacks.

First of all, you need a higher FICO (credit) score to qualif

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

for the piggyback (about 680) than for the first mortgage (as low as 620 will do).

Secondly,

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

a recent study by Standard & Poor's (S&P) has shown that piggyback loans have a higher default risk t

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

an the others.

The study examining the performance of 640,000 piggyback loans secured betwee

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

2002-2004 has shown that piggyback mortgages are 43% more likely to default than the

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

conventional first mortgages even when one statistically controls for such factors as the FICO score

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

f the borrowers.

One reason that immediately comes to mind is the fact that, although the most common

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

30-year first mortgages have fixed rates, piggyback mortgage have variable interest rates that can zo

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

m up and present an unplanned burden for the borrower.

Especially when the piggyback is provided as a

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

HELOC (Home Equity Line of Credit) which is indexed to a floating rate (like the prime rate), the inc

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

eases in future monthly payments should not come as a surprise.

Piggyback mortgages can save you some

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

money upfront but as always – buyer beware. Check with your mortgage broker before making your final

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ecision. It may be well worth it to get a copy of the original S&P study and read further on the topic

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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