First time homebuyers can now have added peace of mind when buying homes in San Diego or anywhere in California. The California Association of Realtors Housing Affordability Fund (HAF) has created an insurance product that will pay up to $1,500 per month to participating home owners who lose their jobs or become involuntarily disabled. The $1,500 per month payment will last for six months from the date of job loss, providing total or partial relief from the burden of paying a mortgage during unexpected hard times.
This Mortgage Protection Program (MPP) was funded with $1Million, and is available for a limited time. To be eligible:
1) The buyer must be a first-time home buyer who hasn’t owned a home in any of the last three years.
2) The home being purchased by the first-time buyer must be located in the state of California.
3) The purchase transaction must have begun (open of escrow) no earlier than April 2, 2009.
4) The home purchase must be completed (close of escrow) by December 30, 2009.
5) The home buyer must be represented in the purchase by a California Realtor who is in good standing with the California Association of Realtors.
6) The home buyer must be a W-2 employee. That is, have a job. Self-employment does not qualify.
The program also provides a $10,000 accidental-death benefit to family members or heirs of the participating home buyer in the worst-case scenario.
There is a “vesting period” of six months before a home buyer can file a claim under this program. The home buyer must also be actively employed for the 4 concurrent months immediately prior making the claim. So in other words, if you purchase a home on July 1, you must wait until January 1 before filing a claim under the MPP policy. And if the job loss or disability begins on January 1, then you must have been regularly employed the prior 4 months from September 1 through December 31.
There is also a “waiting period” of one month after the start of the unemployment or disability before payments start. So in the preceding example, if the home owner becomes unemployed on January 1 then the $1,500 payments would not start until February 1. The precise dates of employment and unemployment must be verified by registering with California’s unemployment office as soon as possible after unemployment begins.
There is no “vesting” or “waiting” period for the $10,000 accidental-death benefit.
Note that the MPP coverage does not provide payments to anyone who voluntarily terminates their employment. The job loss or disability must be accidental. Retirement, resignation, or job termination for good cause (misconduct or otherwise) does not qualify as involuntary. Maternity leave, sickness, or temporary leave for scheduled seasonal breaks or sabbaticals are also excluded. There are other exclusions as well, so anyone considering an MPP policy should thoroughly read and understand the terms of the policy.
The California Association of Realtors has FAQ’s and sample scenarios available for explanation of the MPP policy. For example, what if a couple gets married and then buys a home together? Before the marriage, the man had rented two different La Jolla homes during the previous three years, and the woman owned home in Del Mar but sold it two years prior. Are they eligible? The answer is no. The newly married husband and wife must each independently qualify for the program. Since the wife had owned a Del Mar home in one of the prior three years she does not qualify as a first-time buyer.
Note that there is no marriage requirement in order for co-owners of a home to participate in the MPP program. If two friends or an unmarried couple buy a home together, and if each of the co-owners qualifies as a first-time home buyer, then the MPP policy is available to them.
All of the Realtors on the Schiering Team at RE/MAX Associates are in good standing with the California Association of Realtors. First-time home buyers who use us as their representatives when buying San Diego homes are eligible to participate in this Mortgage Protection Program. Call us at for information about buying a home in San Diego.