warrantyassn.com earns
media attention!

CONTACT: 
Ray Adams (818) 841-4334
Art Ansoorian (818) 881-1183

"Our experience is that mortgage delinquency rates are, in fact, lower as a result of customers having home warranty contracts," said Barry Langer, vice president and manager of People's Bank of Burbank, CA, a full service commercial bank with $3.3 billion in assets.

Langer explained that homebuyers are typically strapped for cash after close of escrow. 

"Our bank requires at least two months of mortgage payments in reserve for most of our home buyers. After coming up with the down payment, many buyers can be down to the minimum, having utilized most of their assets.

"It's highly conceivable that plumbing or heating problems will occur early on, events that homeowners simply cannot ignore. This means that they can easily be late with their mortgage payment. Home warranties cover those problems and ease the financial strain," Langer said.

Ray Adams, president of the Home Warranty Association of California (HWAC), says People's Bank is among a host of lenders that understand and appreciate the value of home warranties.

"The consensus is that when a home warranty is placed on an existing home, particularly during the first year after the sale, it expands the comfort zone to include buyer, real estate agent and lender," Adams said.

He emphasized that if a plumbing or heating problem occurs during that first year, it may effectively render a home uninhabitable.

"Coupled with the fact that the buyer has not had time to replenish their financial reserve, necessity may force the new homeowner to spend the upcoming month's mortgage payment to correct such a defect, especially in the winter.
"If you've got a $3000 bill for a heating system, only have $3000 in the bank, and your children are freezing, you're likely to spend the money to fix the heater first," Adams declared.

Adams and Langer agreed that the value of home warranties is heightened in today's market when buyers are required to come up with large down payments.

"Homeowners don't want to be late with mortgage payments. We recommend home warranties to help alleviate this possibility, particularly during the first year," Langer stated.
Typically, a home warranty covers a home's major operating systems for one year after the close of escrow. Items covered include plumbing, heating and electrical systems, most built-in appliances and water heaters. In recent years, most HWAC member companies have provided additional coverage for homeowners for such items as garage door openers, washer/dryers and refrigerators. During 1998, over 80 percent of existing home sales included a home warranty.
HWAC is a statewide organization of home warranty companies representing over 93 percent of warranty contracts sold in California.

Member firms include American Home Shield Corporation, Buyers Home Warranty Company, Continental Home Warranty Inc., Fidelity National Home Warranty Company, First American Home Buyers Protection, HMS/Cross Country Home Services, Old Republic Home Protection Company, Inc, and United One Home Protection Company of California.

##
6/23/99