Layoff insurance offered to reassure homebuyers

September 20, 1992|By Jim Johnson | Jim Johnson,McClatchy News Service

Builders, brokers and lenders are offering a new incentive to would-be homebuyers whose job worries have kept them on the sidelines -- layoff insurance.

Studies indicate that potential buyers in many parts of the country have shied away from the housing market, despite cheaper prices and low interest rates, because they fear joining the growing ranks of the unemployed.

One way to dispel that concern, some of those who build, finance and sell houses believe, is with a guarantee that covers ++ the monthly mortgage payments of buyers who lose their jobs.

Prudential Realty of California, for example, recently unveiled a plan to pay buyers as much as $5,000 monthly for 12 months if they are laid off. Customers can renew the programs every 12 to 18 months.

Buyers are covered only if they lose their jobs during the first year of homeownership.

The program is being offered to those who buy houses listed with Prudential or those listed with another agency but sold by Prudential. The coverage costs from $20 to $700, depending on the amount of the payments guaranteed.

Glendale Federal Bank is believed to be one of the first lenders in California to offer the layoff insurance.

The Los Angeles-based thrift will pay up to $3,500 a month for up to 12 months at a cost of 3.75 percent of the monthly mortgage payment. On a $1,000 payment, that would amount to $37.50 per month.

Like other insurance, layoff coverages have exclusions and limitations, so it's important to read the fine print, consumer advocates say.

Some plans, for example, may exclude the self-employed, and two-income families may find that they're eligible for only partial payments if just one wage earner loses a job.

Other real estate notes:

* Sacramento and other major metropolitan areas in California are in the spotlight again because of their high housing costs, compared with the rest of the nation.

California's big cities dominate the dark side of a quarterly affordability index sponsored by the National Association of Home Builders.

In its second-quarter report, the Washington-based association recently determined that the West claimed 21 of the 25 least affordable housing markets in the nation -- and 19 of them are in California.

The index, based on a price, income and interest-rate formula, changes little from quarter to quarter.

San Francisco continues to lead the nation as the least affordable housing market. Sacramento was ranked 19th in that category, which is an improvement over its previous position, when it tied with New York City at 15th.

The Big Tomato was squeezed between Jersey City, N.J., which was 14th, and San Bernardino/Riverside, Calif., 16th. Local surveys show the recent median sales price of a new house in Sacramento to be $147,000, while the cost of a previously owned home was $137,000.

The builder's association, relying on a mix of new and resale housing, pegged the national median at $105,000. And it found, not surprisingly, that small towns typically have more affordable housing. Thus, Jackson, Mich., was declared the most affordable housing market in the nation at $59,000, followed by Brazoria, Texas, at $85,000.

* Time shares will be sold at what the auctioneer promises to be discounted prices at the Los Angeles Convention Center Sept. 27.

More than 100 time shares -- at destinations ranging from Mexico to England and from Tahiti to Tahoe -- will be offered for sale by Tri West Inc. of Marina del Rey.

Minimum bids will range from $100 to as much as $14,000, according to the auctioneer, the Piatelli Co.

At previous auctions, time shares have brought on average about half of their original sales price.

Purchases may be made by mail. To obtain seller registration information or to receive a free catalog listing the time shares for sale, call (800) 423-6377.

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