NEW YORK – May 4, 2016 – For the first time, buyers can purchase insurance that protects their downpayment if real estate values fall. One Florida bank offers it now, but more should follow.
Developed for modern homebuyers who experienced a drop in real estate prices during the Great Recession, the downpayment protection insurance was created to give skittish buyers some peace of mind.
Amalgamated Bank, which operates in some Florida cities, currently offers the plan by ValueInsured. Going forward, buyers may have to pay for the coverage at closing depending on the bank. The coverage guarantees that they'll receive at least part of their downpayment back if real estate values fall, subject to coverage rules.
According to an Amalgamated Bank announcement, +Plus by ValueInsured downpayment protection is available for the first time on all eligible Amalgamated Bank mortgages at no cost in the bank's First-Time Homebuyer +Plus program, covering downpayments of up to 5 percent of the home's purchase cost.
Amalgamated Bank is the first bank to make downpayment protection available to its homebuyers, but other lenders may start to offer it as an option.
"Working people shouldn't have to worry about losing the financial control and flexibility that comes with renting when they make the decision to buy," says Keith Mestrich, president and CEO of Amalgamated Bank. "If they need to sell their home, they may be able to do that even if their local housing values are lower than when they purchased. That's why we're working with ValueInsured."
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