I have been recently reading about how derivative instruments (options, forwards, future contracts) are used to protect your securities. I started wondering if its similarly possible to hedge your personal assets (especially home through option contract), where another party would be willing to buy your mortgage at a fixed price on some future date. Do such corporations exist?
No. Such companies don't exist. Derivative instruments have evolved over a period and there is a market place, stock exchange with members / broker with obligations etc clearly laid out and enforceable.
If I understand correctly say the house is at 300 K. You would like a option to sell it to someone for 300 K after 6 months. Lets say you are ready to pay a premium of 10K for this option. After 6 months, if the market price is 400 K you would not exercise the option and if the market price of your house is 200 K you would exercise the option and ask the option writer to buy your house for 300 K.
There are quite a few challenges, i.e. who will moderate this transaction. How do we arrive that house is valued at 300K. There could be actions taken by you to damage the property and hence its reduction in value, etc.
i.e. A stock exchange like market place for house is not there and it may or may not develop in future.