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Protecting home value against housing busts

June 20, 2012|By Lauren Beale
  • A "bank owned" sign is seen in front of a foreclosed home last fall in Miami.
A "bank owned" sign is seen in front of a foreclosed home last… (Joe Raedle )

DENVER -- If you could protect the equity in your home from future price drops, would you? San Francisco-based Home Value Insurance is betting on it.

Available only in Ohio, Oklahoma and Georgia so far, the company offers the only insurance policy sold in the nation that protects homeowners from home price declines.

Say you buy a $300,000 home and sell it after three years. During that time, local prices drop 10% based on the Standard & Poor's/Case-Shiller index. The company's Home Value Protection plan will cut you a check for $30,000 on the sale of your house. The cost of a policy for a $300,000 house is about $75 a month.

Not selling in three years? The policy continues for up to 10 years, as long as you continue your payments.

If home prices increase, the policy can be canceled and rewritten to reflect the higher value. But a price uptick may be some time coming in many markets.

"The over-supply of foreclosures will take years to work out," Home Value Insurance Chief Executive Scott Ryles told a group of real estate reporters attending the 46th meeting of the National Assn. of Real Estate Editors here.

Don't look for the insurance in Southern California any time soon, however. The company so far isn't licensed in the Golden State.

RELATED:

New California foreclosure starts up slightly in May

UCLA forecasts California housing recovery next year

Household net worth slides 35%, Census Bureau says

lauren.beale@latimes.com

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