Housing Bubble
Involuntary unemployment insurance is protection against mortgage foreclosure, says Consumer Credit Insurance Association
February 05, 2003
CHICAGO, Feb. 5 /PRNewswire/ -- A recent report about mortgage foreclosure underscores the value that Involuntary Unemployment Insurance (IUI) can deliver for homeowners in tough economic times like the present, says the Consumer Credit Insurance Association (CCIA).
IUI is a form of credit insurance that makes debt payments for insured individuals when they become unemployed. It can be taken to cover credit card and other consumer debt, auto loans and other installment debt, or to assure payment of home mortgages -- the largest debt and the biggest credit payment most consumers face each month -- when a homeowner loses his or her job through no fault of their own.
A recent survey the Mortgage Bankers Association of America reported that North Carolina has recently experienced one of the highest housing foreclosure rates in the nation largely because homeowners are losing their jobs and the incomes they depend on to make mortgage payments. In the third quarter of 2002, creditors sought foreclosure on 16,000 homes in North Carolina as the state led the nation in foreclosures on conventional fixed-rate mortgages during that period.
"The experience in North Carolina, and the fact that employment is stalled in the current economy, underscores the value that IUI delivers to homeowners," said William F. Burfeind, Executive Vice President of the CCIA.
"Typically, IUI coverage to protect a home mortgage will keep house payments paid up for between six months and a full year depending on the exact terms of the policy, giving homeowners the means to keep the roof over their heads and over their families as they seek new jobs and incomes," Burfeind noted.
Mortgage IUI is usually priced as a small fractional percentage of the monthly mortgage payment and is generally available through mortgage lenders. It is always a voluntary choice for consumers and can be taken at the time a mortgage loan is closed or in some cases can be purchased at a later date.
Mortgage IUI may limit the maximum monthly payment to be made on behalf of an insured homeowner but the limit is usually sufficient to cover fully all but the largest mortgage payments for the insured coverage period.
IUI is one of four principal types of credit insurance. The others are credit life, credit disability and credit property insurance, that respectively insure debt repayment in the event of death, accident or ill health, or loss or damage to property.
Founded in 1951 and based in Chicago, the CCIA is the trade association of more than 140 credit insurers throughout the United States.
Source: Consumer Credit Insurance Association
Related:
Foreclosures rise, late payments fall
