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Released: March 27, 2011

Builders, banks offer free job-loss insurance to home buyers

Source: Kenneth Harney, Washington Post (L.A. Times) (Free Registration)

Insurance programs that make borrowers’ mortgage payments for up to six months if they lose their jobs during an initial one- to two-year coverage period are gaining popularity. Home builders are offering it to new buyers, and some of the country’s largest banks and mortgage lenders think it’s a win-win idea for shaky economic times.

Better yet, the bank, builder or other sponsor of the plan typically provides it free — no direct, out-of-pocket cost to the consumer — as part of its marketing package. Most programs come with specific dollar ceilings on coverage, often ranging from $2,000 to $2,500 a month. Some limit the amount they’ll pay to principal and interest only. Others cover principal, interest, property taxes and homeowners insurance up to a specific amount.

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