Insurance Concept: Homeowner ARM Insurance Policy

Hi All,

Right now here in the USA we're in a real estate bubble not unlike the tech bubble in the late 1990's. Right now their is a an exotic (Greenspan's term, US Fed Chairman) mortgage type of interest only loan. For the first couple of years or so, where the home buyer can pay down principle at their discretion or wait until the cut off date to do so. Where typically a ballon payment begins on these interest only mortgages. So the word of advice is usually just to get these lucrative interest only home mortgages if you don't plan to live in that residential property beyond two to five years or so.

When and if the real estate bubble does burst, where now we're in a sellers market. Those with an ARM (adjustable rate mortage) who want to sell their property after a real estate bubble bursting will lose their shirts. Since no one will be buying, lest at closer to wholesale prices and not what the previous owner paid for their property. This will be more so a renters market after a real estate bubble bursting.

But to digress to the insurance concept I'm suggesting is for the insurance industry for homeowners. To offer those with an interest only (ARM) mortage a side homeowners policy. Usually as the norm banks as the lender have the homeowner required to have a "mortgage insurance" policy. Just in case if they default on their mortgage payments. Where the bank or lender gets the property known as a foreclosure.

My suggestion to the insurance industry is to offer a ARM mortage policy to the home owner. Where much like a disability insurance if they lose their income or what have you. Aren't thrown out into the streets. However this incurance policy concept would cover an existing ARM type mortgage. That would cover the home owners mortgage payment fully in a lump sum or in installments. Where the homeowner keeps the property unlike a regular mortage insurance policy as explained above.

Of course this ARM insurance policy for home owners would provide a structure so as to avoid fraud in claims.