NEW YORK, April 13, 2016 – ValueInsured and Amalgamated Bank today made available a unique new financial product that protects homebuyers’ down payments from falling market values.
+Plus by ValueInsured down payment protection is available for the first time on all eligible Amalgamated Bank mortgages. It is also now exclusively available at no cost in the bank’s First-Time Homebuyer +Plus program, covering down payments of up to 5 percent of the home’s purchase cost. Amalgamated Bank is the first bank to offer down payment protection to its homebuyers.
“The idea behind embedding down payment protection in First-Time Homebuyer +Plus is simply to empower our customers to achieve the American Dream of homeownership,” said Keith Mestrich, president and CEO of Amalgamated Bank. “Working people shouldn’t have to worry about losing the financial control and flexibility that comes with renting when they make the decision to buy. If they need to sell their home, they may be able to do that even if their local housing values are lower than when they purchased. That’s why we’re working with ValueInsured, an innovative company that shares our commitment to building trust and opportunity for the people we serve.”
Developed for modern homebuyers who have experienced housing differently from previous generations, down payment protection provides a long-awaited sense of security.
“The gyrations of the housing market have made homebuyers acutely aware of the rewards and the risks of homeownership,” said James A. Wilcox, professor of economics and finance at Berkeley-Haas. “Down payment protection helps safeguard homebuyers’ hard-earned savings, assuring them that they can get their down payment back whenever they want to move. This will give homebuyers peace of mind, flexibility, and control.”
Fairness Delivered
It will also put homebuyers on equal footing. For decades, lenders have protected themselves from risk through the private mortgage insurance that homebuyers have been obligated to pay. The homebuyer, however, has been without similar protection from loss, which can occur when market value changes.
Also for decades, economists have called for new ways to help homeowners protect their down payment. Hedging home value has been called “the greatest idea never sold,” and today it is being delivered.
“At last, the homebuyer is protected,” said Joe Melendez, CEO of ValueInsured, whose company created the new down payment protection product. “It’s fitting that Amalgamated Bank, which has long stood for innovation and customer empowerment, is the first bank to offer this important new protection directly to homebuyers. It helps keep home buying fair, safe and transparent.”
The American Dream
Down payment protection frees consumers to act on their bedrock values. Owning a home is an important part of the American Dream for more than four in five millennials (83 percent), according to the new ValueInsured Modern Homebuyer Survey.[1] In fact, homeownership was the number one personal definition of the American Dream for millennials, ahead of financial security, success at my job and raising a family of my own.
Other findings:
- More than three in four Americans (77 percent) believe owning a home is more beneficial than renting.
- More than three-quarters of millennials (76 percent) believe buying a home is one of the best financial investments they can make.
- Seventy percent of homeowners would upgrade to a new home sooner if they had more confidence in the housing market.
- That rate is 90 percent among millennials, who are often “locked” by housing market worries into starter homes as their families expand.
Amalgamated Bank – with offices in New York City, Washington, D.C., and Pasadena, Calif. – is the first of many financial institutions that will offer down payment protection through ValueInsured nationwide.