Posted by Linda_in_IN on 12/13/13 9:40am
Msg #496007

Underwater mortgage protection - lemonade out of lemons?

They say when life gives you lemons, make lemonade. Well, apparently some financial services have found the proverbial lemons and are offering products to protect homeowners who have to sell even though they are upside down in their home.

" AmTrust Financial Services is marketing an insurance program called Underwater Mortgage Protection, which promises to cover any gap should borrowers have to sell at a time when their houses are worth less than their mortgage amounts. EquityLock Solutions in Denver is offering Home Price Protection contracts, promising to replace equity lost between purchase and resale.

Both products are available in a limited number of states. EquityLock’s business is mainly in the Midwest and on the West Coast, while AmTrust began its underwater-insurance program this month in North Carolina, Oklahoma, Georgia, Arizona and Alabama. The program’s co-founder, Matthew Kayton, says he hopes to be licensed in all 50 states within the next year."

But apparently, as mentioned in the article, it may not help the homeowners who may need it the most.
"Neither product will help the multitude of borrowers now underwater. Although their numbers have declined since the housing market crash, nearly 11 million homeowners remain in a negative equity position, according to Zillow, a real estate website.

These protections are aimed at borrowers who are in a healthy equity position and might be persuaded to pay a little more to keep it that way. “Real estate markets are always cycling,” Mr. Kayton said. “The consumer doesn’t want to get caught in that down cycle.”

http://www.nytimes.com/2013/12/15/realestate/a-life-vest-for-borrowers.html?_r=0