Where can I sign up for Home Value Protection?

Home Value Protection (HVP) is a financial product offered by Home HeadQuarters, Inc., a Syracuse based not-for-profit community development organization and sponsored by the Syracuse Neighborhood Initiative, which has provided a $5 million federal grant. Freddie Mac, the Yale School of Management, the Neighborhood Reinvestment Corporation, and Potomac Ventures, Inc. have all provided their expertise and resources to develop this exciting new product. You can visit Home HeadQuarters at 124 East Jefferson Street in downtown Syracuse or call (315) 474 – 1939 ext. 248 to speak with a professional who can answer your questions and help you sign up for Home Value Protection if you decide it is right for you.

What does it cost?

Home Value Protection can protect you from decreases in home prices at a very affordable price. HVP is available for a one-time fee of only 1.5 percent of the Protected Value of your home. Financing is available from Home HeadQuarters for this fee if you so choose. For an average-priced ($60,000) home in Syracuse, a 1.5 percent fee financed at six percent interest over four years would cost only $21 per month. Home HeadQuarters is able to offer HVP at this low price because this non-profit program is backed by $5 million in U.S. government funding from the Syracuse Neighborhood Initiative.

Home HeadQuarters can provide loan financing for any HVP customer. It can make lower-cost loans if you meet eligibility guidelines. Of course, you can also pay cash for the product. You can purchase HVP at any time, so long as the home is your primary residence.

Things you should know before deciding to purchase Home Value Protection

How does Home Value Protection measure home prices changes in my ZIP code and determine the amount of my HVP payment?

HVP measures how home prices are changing in your ZIP code through median sales prices. The sales prices give an accurate picture of what has happened to the value of an average home in a particular ZIP code. The data for the index is provided by the City of Syracuse and the Greater Syracuse Association of Realtors.

Your payment will be equal to the percent decrease in prices times the Protected Value of your home (the value of your home when you enroll in the program).

When is protection available to me?

You can get a HVP Payment when you sell your home, if the median sales price in your ZIP code has declined from the time you enrolled in the program. You must have owned your home for three years unless you can demonstrate a severe hardship such as job loss or illness that requires you to sell your home earlier. Protection is available for a 30 year term – at the end of 30 years, if you still live in your home, HVP makes a payment to you automatically if the median sales price is lower than it was when you enrolled.

What if I lose more money upon reselling the home than I get from the Home Value Protection Payment? What if I make money upon reselling the home, but the index has gone down?

HVP provides a payment only if the median sales price at the time you sell your home has declined from when you enrolled in the program. The amount of the payment is always equal to the percent decline in the median sales price times the Protected Value of your home, regardless of whether you made or lost money on the sale of your home and regardless of how much you made or lost.

It’s important to remember that the median sales price represents the average performance of home prices in your ZIP code. The program has been constructed this way deliberately, to encourage homeowners to maintain and improve their homes and to make sure that it does not reward homeowners who fail to maintain their homes. If you have maintained your home in excellent condition or have improved it, you could make money on the resale of your home and still get a HVP payment if the median sales price has gone down! At the same time, you could lose money on the resale of your home and get no HVP payment or a HVP payment that is less than your losses. You can reduce the possibility of this happening by maintaining your home in good condition and by encouraging other people on your block to maintain their homes, too.

How much Home Value Protection should I purchase? Do I need to get an appraisal?

In most cases, it’s a sensible strategy for homeowners to purchase HVP for a Protected Value that is roughly equal to the current market value of their home. While an appraisal is an accurate way to get an estimate of the current market value of your home, it’s not required that you have an appraisal done. If you purchased your home recently, you could use the purchase price of your home to inform your decision about how much HVP to purchase. You can also use the Full Assessed Value that the City Assessor’s office assigns your home as a guide.

In some cases, you may decide that you wish to purchase Home Value Protection for a Protected Value that is greater or less than the market value of your home. For instance, if you are planning improvements to your home that will raise its value, you might consider purchasing HVP for a Protected Value that reflects the additional market value of those improvements added to your home.

The decision on how much Home Value Protection to purchase is yours to make. If you choose a higher Protected Value you will pay a higher fee to purchase HVP but will receive a higher payment from HVP if prices decline in your ZIP code. If you choose a lower Protected Value you will pay a lower fee to purchase HVP but receive a lower payment from HVP if the value of the market index declines in your ZIP code. There are some limits on your choice of a Protected Value, however, the minimum Protected Value for which you can purchase HVP is 50 percent of the current assessed value of your property or $30,000, whichever is greater. The maximum Protected Value for which you can purchase HVP is 150 percent of the current assessed value of the property or $200,000, whichever is less.

Are there different prices to sign up for HVP in different ZIP codes in Syracuse?

No. However, HVP is only available if your home is inside the City of Syracuse.

What happens if I refinance my mortgage?

You’ll still be enrolled in the Home Value Protection plan. Your mortgage and HVP are two separate things. If you refinance your mortgage, the HVP you purchased is still in effect – until such time as you sell your home.

Is there a cap or are there any exclusions on the amount of coverage to be provided?

There is no cap on the HVP payment that you may receive. However, there are exclusions that limit the payments HVP would make if a large-scale disaster (such as a hurricane, an environmental disaster, or an act of war or terrorism) were to severely damage many properties in your ZIP code, causing the Home Market Value Index to decline. The HVP contract contains details on these exclusions. Unlike insurance policies, HVP fees would be returned to consumers if an excluded event occurs.

What’s the procedure for obtaining a HVP payment?

The homeowner must provide a copy of the accepted purchase offer to start the claims processing process. Home HeadQuarters will make the Home Value Protection payment at the closing or within 20 days of receiving this document from you, whichever comes later. The payment is made as an escrow deposit with your attorney representing you in the sale of your home. If you have a mortgage on your home, HVP pays you by paying down your outstanding mortgage balance by the appropriate amount. If you owe less on your mortgage than the amount of your HVP payment, HVP pays off your mortgage completely and pays you the rest directly. If you don’t have a mortgage, HVP pays you the entire amount of your HVP payment directly.

Is my HVP policy assignable to anyone else?

In certain cases such as death, separation and divorce, your HVP policy may be assigned to heirs, successors, beneficiaries, and others who would inherit and live in your home as described in the HVP contract.

How can I be sure that Home HeadQuarters will be able to make HVP payments?

Home HeadQuarters is backed by a $5 million grant from the federal government and can use these funds – in addition to fees collected and investment income – to make payments if house prices decline. If necessary, Home HeadQuarters will limit the number of customers enrolling in the program to ensure that there are adequate reserves on hand. Our research team, composed of leading economists from Yale University, New York University, and other institutions, has constructed capital reserve policies designed to keep Home HeadQuarters solvent even through severe price declines (much worse than any that Syracuse has experienced). To provide participants with peace of mind, Home HeadQuarters will make available to the public routine information about its capital reserve levels and claims history.

Are there any circumstances under which it is not appropriate for me to purchase a HVP policy?

If you plan to live in your home for less than three years, it is not appropriate for you to purchase a HVP policy since you would not generally be eligible for a HVP payment when you move. If you are not concerned about your home’s resale value, it may not be advisable for you to purchase Home Value Protection (for instance, if you intend to live in your home or keep your house in your family forever). You may want to talk to a financial advisor to discuss whether HVP makes sense for you.