Homebuyer down payment protection offered by Amalgamated Bank

Well intended insurance measures home values according to a government index
  • First time buyers utilizing an Amalgamated Bank loan can protect up to 5 percent of their down payment at no cost.

  • Under the program homeowners have to wait two years before they can file a claim.

  • +Plus insures down payments up to 20 percent for a maximum of $200,000.

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With the goal of protecting homebuyers' down payments from falling market values, Amalgamated Bank has teamed with ValueInsured to offer the company's +Plus product on all eligible mortgages it finances. The protection service will allow homeowners to insure down payments of up to 20 percent for a maximum of $200,000. While the concept of down payment protection seems applicable in volatile markets with historical price fluctuations, the +Plus program has a number of catches and only seems to benefit borrowers who purchase lower-valued homes. If buyers put $20,000 down on a $200,000 home they would pay ValueInsured a one-time premium of roughly $1,200. These homeowners are now insured for seven years on that down payment. However, if those homeowners sell their homes at a loss they might not recoup all of their lost equity. Why? Because ValueInsured measures home value according to a government index, which measures prices by state, not by city, submarket, neighborh...