Beaverton Oregon Real Estate and more: Unemployment insurance? Why can’t we do that for mortgages with a twist? By Todd Clark
In the State of Oregon, every month an employer is required to pay in to an unemployment insurance fund so that if someone should become unemployed, due to something other than just being an idiot and being fired, then they can collect unemployment. So why can’t we do something like this with home owners and their mortgage?
Last week, I wrote a featured
post that got heated at times about PMI
(Private Mortgage Insurance) and I
guess it is a big fat lie as it really isn’t insurance. It is a way for
someone
to just collect funds from a buyer with no benefit to buyers at all.
But, to
give them the privilege to own a home they probably can’t afford and
pay even
more for it.
So, here is my idea,
instead of PMI, why don’t we have buyers (all buyers) put
funds into an emergency
unemployment fund set up at close that they pay an extra
$200 a
month on their mortgage, and if they should ever lose
their job, death or
medical issue, this fund would help them pay their mortgage.
But, here is the twist, when they go to sell their home, if they don’t use the fund, they get all the money back that was put in to the fund! How is the fund paid for and managed? The interest earned on the money stays with the institution holding the money. So, the buyer isn’t losing money and the bank that is holding the emergency funds is also getting paid.
To me, after last weeks post, I have completely decided that PMI companies are a complete rip off and no benefit to anyone but themselves. If they can take $200 a month, so then they can ask the buyer at close of a short sale or foreclosure for repayment of the funds they paid to the bank, then that is just completely stupid to me.
The best part of this plan is that it can be set up without government involvement, and we all now how government involvement is working out in the housing industry right now.
Todd Clark - Broker / Sales Coach
Palazzo Realty Group
Phone: (503)524-9494
Fax: (503)622-8739
©2009 Todd Clark - Beaverton Oregon Real Estate and more: Unemployment insurance? Why can’t we do that for mortgages with a twist?
Todd Clark and the Friendly Home Team
Knipe Realty
Todd@IFoundYourNewHome.com
Phone: (503)524-9494
Fax: (503)746-9573
I am a licensed Realtor who specializes in Washington County, Oregon and also work in both Clackamas and Multnomah Counties including the cities of Aloha, Beaverton, Canby, Clackamas, Gladstone, Gresham, Happy Valley, Hillsboro, Milwaukie, Oregon City, Sherwood and Tigard. All information contained in these posts are copyrighted and cannot be used without prior written approval authorization from the author me Todd Clark. If you are looking for an outstanding agent please give me a call I would love to help you with all your real estate needs.
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Hi Todd...Sounds good to me .
Cheers, have a great Speechless Sunday :O)
I guess I'm with you, Todd - I've never quite understood why that insurance didn't kick in and work when buyers started defaulting on their loans.
Hi Todd: Sorry but I don't think just the interest on that money would be enough to cover the claims that would be submitted.
:)
In the last awful market, back in the 80's, I actually had a seller contact her PMI insurance company and the company worked out with the first trust holder how much they would cover if the seller defaulted. Going from there, we knew how much we had to get for selling the house. The seller's credit was protected, the first trust holder was covered, and the PMI company did what they got paid to do. Silly me, I assumed that's what PMI was for.
Todd,
"AFTFLACK!
Bill
Fred - I'm not very good at being speechless, but I'll try!
Maria - Because it seems they aren't really insurance companies at all. Real my other post, it was a real eye opener.
Matt - No, No, that would just pay them to hold the money. They would only be able to use the money they put in to the account. Basically a forced savings account and less of an insurance policy.
Margaret - Now, that was smart thinking and I bet you got the home sold quickly because of it. Was it this hard to get a short sale through in the 80s also?
Bill - I think you just made the quote of the month for me, I'm rolling on the floor here!
That'd be cool. I think that it should almost be a mandatory thing. The only problem is that the government would get involved and mismanaged the funds or something. Seriously, though. I love the idea of this sort of account.
I like the part about the government not being involved. With prices down buyer should be able to afford the increased cost. I'm still thinking about the idea.
gee, i don't know. how about putting 20% down on a house one can actually afford. i've never paid pmi in my life. and i've been paying mortgages for a lot of years. have never taken a heloc either. improvements were done with cash.
gee, i don't know. how about putting 20% down on a house one can actually afford. i've never paid pmi in my life. and i've been paying mortgages for a lot of years. have never taken a heloc either. improvements were done with cash.
Great idea! There must be too much money for the "powers that be" to let something simple like this happen.
And Bill, that was hysterical! Thanks.