http://finance.yahoo.com/news/fastfunds-financial-corporation-acquires-exclusive-130000087.html
NET LIFE is a development stage enterprise that has developed and is offering an innovative new mortgage product that is not based on credit history (no doc) or personal guarantees. It is only secured by the underlying collateral and a life insurance policy on the borrower. Therefore, all that is required to qualify for a mortgage loan is qualifying for a life insurance policy, a down payment that usually amounts to 10% of the purchase price and verification that the borrower has the financial ability to pay the monthly payments. NET LIFE believes this mortgage product will be attractive to a wide spectrum of potential borrowers including:
first time homebuyers;
borrowers who have experienced prior financial difficulties such as foreclosures, bankruptcies, late payments or credit problems; are presently employed and whose current income would qualify for a mortgage loan; but who couldn't otherwise qualify; and
borrowers who may wish to bypass the traditional paperwork involved in the typical underwriting process but who would otherwise qualify.
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When the insurance commences, the value of the insurance coverage must equal the capital outstanding on the repayment mortgage and the policy’s termination date must be the same as the date scheduled for the final payment on the repayment mortgage. The insurance company then calculates the annual rate at which the insurance coverage should decrease in order to mirror the value of the capital outstanding on the repayment mortgage. Even if the client is behind on repayments, the insurance will normally adhere to its original schedule and will not keep up with the outstanding debt.
Some mortgage life insurance policies will also pay out if the policyholder is diagnosed with a terminal illness from which the policyholder is expected to die within 12 months of diagnosis. Insurance companies sometimes add other features into their mortgage life insurance policies to reflect conditions in their country’s domestic insurance market and their domestic tax regulations.
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Response by ab_11218
almost 13 years ago
Posts: 2017
Member since: May 2009
so if he doesn't pay, they don't need to take years to foreclose, they just kill. innovative idea.
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Response by MortgageMan
almost 13 years ago
Posts: 0
Member since: Mar 2013
I called the company and spoke with a rep. I understand the concept: the mortgage is guaranteed by the fully-paid-up life policy. (ie: $500K mort requires $1.0MM life policy). If the person defaults on the mortgage, the life policy guarantees the re-payment (in time) - but - it can be sold or "cashed-out" at a discount to recover the P&I. Super simple. No up-front fees and they pay for the life policy. Great idea.... This will actually work.
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Never heard of this.
http://en.wikipedia.org/wiki/Mortgage_life_insurance
When the insurance commences, the value of the insurance coverage must equal the capital outstanding on the repayment mortgage and the policy’s termination date must be the same as the date scheduled for the final payment on the repayment mortgage. The insurance company then calculates the annual rate at which the insurance coverage should decrease in order to mirror the value of the capital outstanding on the repayment mortgage. Even if the client is behind on repayments, the insurance will normally adhere to its original schedule and will not keep up with the outstanding debt.
Some mortgage life insurance policies will also pay out if the policyholder is diagnosed with a terminal illness from which the policyholder is expected to die within 12 months of diagnosis. Insurance companies sometimes add other features into their mortgage life insurance policies to reflect conditions in their country’s domestic insurance market and their domestic tax regulations.
so if he doesn't pay, they don't need to take years to foreclose, they just kill. innovative idea.
I called the company and spoke with a rep. I understand the concept: the mortgage is guaranteed by the fully-paid-up life policy. (ie: $500K mort requires $1.0MM life policy). If the person defaults on the mortgage, the life policy guarantees the re-payment (in time) - but - it can be sold or "cashed-out" at a discount to recover the P&I. Super simple. No up-front fees and they pay for the life policy. Great idea.... This will actually work.