Insurance is a way to protect the borrower and also allow the treasury to add funds. Both with the 5% fee up front and the 25% penalty.
I am proposing a similar structure for those who did not buy insurance. This structure would also protect the borrower and add profit to the treasury. Since the borrower did not buy insurance they have much less protection and the treasury stands to make much more money.
I propose that borrower be allowed to take their assets out of foreclosure for same amount a timeframe as with insurance. The key difference is that the borrower must pay a 100% penalty vs the 25% penalty they would have paid with insurance.
This is a win for the borrower and the treasury much the same way insurance is. Only at much higher stakes for both parties.
This is a win for the treasury in two key ways. 1) They make large amount of money immediately. 2)
More borrowers will be willing to borrow on this platform with this added layer of protection for them, allowing the platform to grow faster and larger and ultimately be more profitable for treasury.
The more the borrower is protected, the more borrowers will trust and use the platform, and ultimately the more successful the platform becomes.