Realtors Offer Cushion For Laid-off Buyers

Some Will Ensure Mortgage Is Paid If You Lose Job

April 16, 2009|By Lorraine Mirabella | Lorraine Mirabella,lorraine.mirabella@baltsun.com

Nervous consumers have been offered free suits, plane ticket refunds and the chance to return new cars if they lose a job after making a purchase.

Now builders and real estate companies are rolling out incentives to pay a laid-off homebuyer's monthly mortgage in hopes of jump-starting the weak housing market.

Long & Foster Real Estate Inc. started a program Wednesday offering insurance that helps pay a buyer's mortgage for up to six months.

Earlier this week, Drees Homes, which is building communities in Frederick and Laurel, said it will cover up to $2,500 of a monthly mortgage payment for six months. It joins builder Ryland Homes, which last month began offering out-of-work buyers a similar program.

With sellers slashing prices and mortgage rates at historic lows, "we know there are homebuyers out there that would like to take advantage of buying a home in this market but don't quite have the confidence to do so," said Glen Phillips, chief risk officer at Chantilly, Va.-based Long & Foster, which is one of the largest real estate companies in the Baltimore area.

As U.S. unemployment has climbed, companies have worked job-loss protection incentives into their marketing, including Hyundai, which announced a program in January promising that it will take back cars from people who lose their jobs, suffer a physical disability or are self-employed and forced into bankruptcy.

In March, retailer Jos. A. Bank said it would give refunds to customers who bought a suit and then lost their jobs. The customer can keep the suit. And JetBlue Airways will refund a fare or vacation package for customers who lose a job.

The housing market appears to be seeing some signs of life thanks to low interest rates and the government's $8,000 credit for first-time buyers. But economists insist the underlying problems with joblessness, weak values and homeowners who owe more than their houses are worth remain the biggest hurdles in turning the market around.

Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors, said real estate firms are responding to current economic realities and others are likely to follow suit.

"Is it going to be the thing that turns around the entire market? No, but this is a smart way to have sellers invest some small amount of money in making their property more marketable," Landers said.

A spokesman for Coldwell Banker Residential Brokerage, another large real estate company in Maryland, said Wednesday that the company does not have a similar national program but it is under discussion.

Long & Foster's program, which is available in the seven states where the company sells homes, would aid homebuyers who experience an involuntary job loss within 24 months, starting 60 days after the loan closes. The $550 insurance would be paid by sellers. Buyers would be eligible for payments of up to $1,800 a month for up to six months.

The program is one piece of an educational and financial program called Homeowner Education and Loan Protection (HELP) run by the nonprofit Rainy Day Foundation. It was started about a year ago and initially had partnerships with lenders who counseled borrowers.

But as job losses in the U.S. have mounted, builders and real estate firms have taken an interest in using HELP and offering the job loss protection. Rainy Day now has about 100 lender and builder partners across the country, said CEO Rick DelSontro. Long & Foster is the second real estate firm, after Keller Williams of South Florida, to join, but others have expressed interest, he said.

In Maryland, other job loss protection programs are being offered by Drees Homes, of Fort Mitchell, Ky., which has made the program eligible to new homebuyers who get a loan through First Equity Mortgage.

Ryland, which currently is selling eight new-home communities in the Baltimore area, will make mortgage payments of up to $2,500 a month depending on the community for as much as a half a year.

"We wanted to just assure our homebuyers who are unsure about the economy or their jobs that their mortgage payment would be taken care of if they would lose a job," said Earl Robinson, vice president of sales and marketing for Ryland's Baltimore division.

HOMEBUYER HELP

Some real estate companies and builders are offering programs to provide mortgage relief to homebuyers who might lose their jobs. Among the programs:

* Long & Foster Real Estate Inc. is allowing sellers to buy $550 insurance that will pay up to $1,800 a month in mortgage payments for half a year if a buyer loses their job.

* Ryland Homes and Drees Homes will pay up to $2,500 a month in mortgage payments, depending on the community, for up to six months for a buyer who loses their job.

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