In Case of Unemployment, Who Pays Your Member's Mortgage?

Consider this worse-case scenario: any one of your members who has a mortgage with your Credit Union is laid off from his or her job. There are state unemployment benefits to help pay the bills, but it's just a fraction of the member's former salary. The family's financial obligations still have to be met, with the monthly mortgage payment probably accounting for the greatest portion of the bills. What happens if the mortgage can't be paid? The homeowner is one month behind, then two months and the situation becomes unmanageable. The family is facing the nightmare of foreclosure and the prospect of losing their most valuable investment. The Mortgage Bankers Association of America reports that, nationally, 1.18 % of U.S. homeowners were in some stage of foreclosure during the fourth quarter of last year.

 

By My Credit Union

 

Consider this worse-case scenario: any one of your members who has a mortgage with your Credit Union is laid off from his or her job. There are state unemployment benefits to help pay the bills, but it's just a fraction of the member's former salary. The family's financial obligations still have to be met, with the monthly mortgage payment probably accounting for the greatest portion of the bills. What happens if the mortgage can't be paid? The homeowner is one month behind, then two months and the situation becomes unmanageable. The family is facing the nightmare of foreclosure and the prospect of losing their most valuable investment. The Mortgage Bankers Association of America reports that, nationally, 1.18 % of U.S. homeowners were in some stage of foreclosure during the fourth quarter of last year.

This scenario is not an isolated incident. During the past two years, jobs lost have numbered almost 2.5 million, both white collar and blue collar. In June of this year, the unemployment rate was at a nine-year high of 6.4% as the nation has experienced one of the most severe sustained declines in jobs since the early 1980's. Even though the July unemployment figure was slightly lower at 6.2%, there have been positive economic indicators in the past which have proven misleading. The truth is that bad situations can befall good people in any economy. What can help your members if the unexpected happens? The answer is The American Home Protection Plan (AHPP) which is an Affinity Membership Plan with numerous benefits for the homeowners, including Unemployment Mortgage Payment Protection. If your member loses his or her job due to plant closing, downsizing, layoff, strike or lockout or any type of involuntary unemployment, the AHPP will make the member's mortgage payments for up to $1,500 for up to 6 months. These payments give the beleaguered family financial breathing room.

Offering the American Home Protection Plan is a win-win situation for both your Credit Union and your Members. The Credit Union offers the plan to its members who are taking out a mortgage (both mortgagor and co-mortgagor) or who are refinancing. All other benefits in the AHPP including Legal Referral Service, Low-Cost Long Distance, Property Maintenance Referral Service, and 24-Hour Nurse Hotline are available to all family members. The payments may be included as part of the mortgage contract or financed by the Credit Union outside the contract. There is a full Disclosure Agreement for the member - this is not a hidden cost. Your member chooses to take the AHPP and the majority of people do choose to have this kind of safeguard. Once the AHPP is sold to your members, all claims are handled directly by the AHPP - the Credit Union is not burdened with administrative duties. Making claims is simple - a toll-free hotline is provided. Your Credit Union receives a commission on each sale and the Plan is continuously renewable. The Credit Union continues to receive a commission each time the AHPP is renewed so there is an on-going stream of profit from each and every sale. The Credit Union has the added advantage of increasing its loan volume through the sale of the AHPP. For more information about the AHPP (and to find out how to contact us), please go to our website, www.AmericanHomeProtection.com.

This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

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Aug. 18, 2003


Comments

 
 
 
  • Thank you for the knowledge
    Anonymous
     
     
     
  • Reads like an advertizement. Any track record on performance/complaints with AHPP?
    Anonymous
     
     
     
  • Great idea.
    Anonymous
     
     
     
  • Keep these kinds of win-win ideas coming!!
    Anonymous
     
     
     
 
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