Protecting homeowners from the unexpected

Matthew Whilden, 24, recently bought a new house in Kirkland, Wash. He knew it was a great time to buy. Even so, the idea of making those monthly mortgage payments made him nervous.

Whilden’s mortgage broker, Cobalt Mortgage, told him about the Rainy Day protection plan that comes with all of its FHA loans.

“I probably would have gone through with the purchase anyway,” Whilden tells me, “but I wouldn't feel as good about it.”

Cobalt Mortgage President Keith Tibbles, is a big believer in the program.

"It doesn't protect them indefinitely,” he stresses, “but it protects them during a period of time where they may have to go look for a different job.”

According to Dean Bloxom, president of Arizona-based imortgage, fear about the economy “remains one of the major stumbling blocks” for many potential homeowners, even if their own job is not at risk. 

“This program gives them some peace of mind that they can make a good long-term decision without worry.”

HELP is on the way
For most of us, it’s hard to imagine what it would be like to lose our house. That nearly happened to Liz Zirnheld, 28, and Steve Ernspiker, 32, of Mount Washington, Ky.

After Ernspiker lost his job, the couple missed several mortgage payments and the bank was getting ready to foreclose on them.

“It was a real bad time, depressing and sad and very hard on both of us,” Zirnheld remembers.

The foundation approved the couple’s application for an emergency mortgage payment grant.

“Without the Rainy Day Foundation we would not be living here anymore,” Zirnheld says. “We would be one of the statistics.”

The $3,000 got them current on their payments and stopped the foreclosure. They also received delinquency counseling and help creating a family budget.

“I am forever indebted to them,” Zirnheld says. “We hit a terrible bump in the road and they got us through it.”

A word of caution
Greg McBride, chief financial analyst at Bankrate.com advises potential buyers to be realistic about what a program like this can do.

"While a mortgage protection program can provide valuable peace of mind, it's not to be used in lieu of an adequate savings cushion or to buy a home before you're truly ready," he advises.

McBride says millions of people have been out of work for more than 6 months during this recession. That’s longer than the Rainy Day Foundation will pay your mortgage.

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