Industry NewsMortgage

Don’t fear the pink slip

'Payment protection plans' target job-loss worries

Payment protection plans that promise to cover homebuyers' mortgage payments for a time if they lose their jobs are becoming an increasingly popular marketing tool for mortgage lenders, homebuilders and Realtors. But consumer advocates question the value of such "single event" insurance policies, and warn that a payment protection plan shouldn't be the deciding factor in whether or not to move forward with a home purchase. Some correspondent lenders were offering the payment protection plans even before unemployment surged. Now major builders and some Realtors are getting in on the act, too. The California Association of Realtors announced on April 2 that it would apply $1 million its members had donated to a charitable fund earmarked for affordable housing, and use it instead to buy unemployment insurance policies for about 3,000 first-time homebuyers. The Association will prepay the insurance policies for one year. For about $330 per homebuyer, the policies CAR ...