Builders offer delayed payments, low rates, layoff insurance


MIAMI – Feb. 10, 2009 – Some of the biggest home builders in the country are offering perks that go beyond upgrades, vacations and paid closing costs. These incentives could further burden their cash flow, but they are pulling out all the stops to close sales at a time when competition with discounted foreclosures is fierce and many consumers have lost their jobs.

Lennar Corp., for instance, is offering 30-year mortgages with an interest rate of 3.875 percent; and both Toll Brothers and Pulte Homes offer rates of 3.99 percent.

Meanwhile, Hovnanian Enterprises is offering insurance for “involuntary unemployment,” covering the mortgage payment for up to six months in the event of a job loss.

In Chicago, Cleveland, Denver, Indianapolis, Michigan and Minnesota, Pulte is delaying mortgage payments for six months for qualified buyers making purchases on or after May 1.

“They’re looking to distinguish themselves among their peers in a very, very tough market,” says Fitch Ratings analyst Robert Curran. It probably pulls [in] some incremental sales, but I think in the environment we’re in right now, it’s probably not going to make a big difference.”

Source: Wall Street Journal (01/28/09) Wotapka, Dawn

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