I read an interesting article in the Detroit Free Press this morning. It appears that the popular layoff insurance that the auto companies have been advertising has now come to real estate, at least in this area. Several big home builders, including Toll Brothers and our local big guy - Pulte Homes – have begun offering an insurance policy with their homes that covers from 4 to 6 months of house payments, if the buyer gets laid off. With so much uncertainty in our local economy and looming layoffs at the automakers and automotive suppliers, this is an attractive lure for those looking to buy a new home.
An even better deal being offered by a luxury condo complex in Atlanta was reported in the same article. Atlanta-based Cousins Properties is offering to refund all of their mortgage payments to buyers, if, after three years, the value of the condo that they buy should be appraised at less than what they paid for it. The company will also let buyers walk away from the property, if they lose their jobs or can’t make their mortgage payments anymore. They would lose their 5% down payment, but they would not have a foreclosure on their record. It’s sort of a pre-arranged deed-in-lieu arrangement – a “quick rinse” in government parlance.
Some real estate companies have also jumped into the layoff insurance game, as a way to encourage customers to buy. There is a non-profit called Rainy Day Foundation, which administers the insurance programs for builders and other companies making the offers. You can visit their site at http://www.rainydayfoundation.org .
While this all sounds great, the reality in our area is that giving someone 4-6 months to find a new job is not likely to help. We have unemployment well above 10%, with more to come, once GM declares bankruptcy and that ripples through the supplier base. In a bit of appropriate irony, the Free Press ran the bulk of the article about these programs right next to another article titled “Subprime swindlers preying on homeowners facing foreclosures.”
Are you seeing these mortgage insurance programs in your areas? Have they been effective in getting buyers off the fence? Inquiring minds want to know.
An even better deal being offered by a luxury condo complex in Atlanta was reported in the same article. Atlanta-based Cousins Properties is offering to refund all of their mortgage payments to buyers, if, after three years, the value of the condo that they buy should be appraised at less than what they paid for it. The company will also let buyers walk away from the property, if they lose their jobs or can’t make their mortgage payments anymore. They would lose their 5% down payment, but they would not have a foreclosure on their record. It’s sort of a pre-arranged deed-in-lieu arrangement – a “quick rinse” in government parlance.
Some real estate companies have also jumped into the layoff insurance game, as a way to encourage customers to buy. There is a non-profit called Rainy Day Foundation, which administers the insurance programs for builders and other companies making the offers. You can visit their site at http://www.rainydayfoundation.org .
While this all sounds great, the reality in our area is that giving someone 4-6 months to find a new job is not likely to help. We have unemployment well above 10%, with more to come, once GM declares bankruptcy and that ripples through the supplier base. In a bit of appropriate irony, the Free Press ran the bulk of the article about these programs right next to another article titled “Subprime swindlers preying on homeowners facing foreclosures.”
Are you seeing these mortgage insurance programs in your areas? Have they been effective in getting buyers off the fence? Inquiring minds want to know.
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