More Builders Offer Extra Safety Net to Buyers

Builders are trying another approach to lure buyers by offering an insurance program--usually free--that would pay borrowers’ mortgage payments for up to six months in case they lose a job during a one- to two-year agreed coverage period after buying a new home.

The plans usually cap coverage, such as with pay outs of $2,000 to $2,500 a month. Some insurance plans also limit the amount the builders will pay toward principal and interest.

Quadrant Homes, part of Weyerhaeuser Real Estate, in the Seattle-Puget Sound market began offering a two-year, $2,000 to $2,500 insurance plan.

"We wanted to give our buyers a little of the confidence they might need" to move ahead with a purchase, says Ken Krivanec, Quadrant's president.

Job loss insurance for mortgages is usually not available directly to consumers, but it's sometimes arranged through lenders, builders, mortgage insurers, and some state housing agencies.

Source: “Builders Offer Buyers a Protection Plan,” TheRealDeal.com (March 25, 2011)