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Nov 5, 2018
Proposed Law: freezing mortgage payments after death
MK Yaakov Asher (UTJ) has proposed a law that would freeze mortgage payments to the bank for a year in a situation of a death until insurance money comes in to the family.
The purpose of this is to lessen the financial burden on the family off the deceased.
The Finance Committee of the Knesset has voted today in favor of this proposal.
source: Biznews
On the one hand this makes sense, especially in light of the way insurance companies often delay payouts. This would lessen the burden, especially if it is the main breadwinner of the family that passed.
On the other hand, a loan is a loan, and why should the banks lose on its returns, especially for so long? It isnt the banks fault the insurance companies take so long to pay. Why do the banks have to lose, from delayed payments, from fluctuating interest rates, because of other people's issues?
I don't know which side should take precedence, but it does seem that this would be a big help to a grieving family.
The purpose of this is to lessen the financial burden on the family off the deceased.
The Finance Committee of the Knesset has voted today in favor of this proposal.
source: Biznews
On the one hand this makes sense, especially in light of the way insurance companies often delay payouts. This would lessen the burden, especially if it is the main breadwinner of the family that passed.
On the other hand, a loan is a loan, and why should the banks lose on its returns, especially for so long? It isnt the banks fault the insurance companies take so long to pay. Why do the banks have to lose, from delayed payments, from fluctuating interest rates, because of other people's issues?
I don't know which side should take precedence, but it does seem that this would be a big help to a grieving family.
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I wouldn't worry too much about the banks. Loans will become that much riskier for them, which will be reflected in the mortgage rate.
ReplyDeleteThere was also nothing about whether or not interest will continue to accrue, which I imagine the banks will push for, if for no other reason than to discourage people from taking advantage of the one-year grace more than they really have to.
Given that insurance is (always?) a requirement for getting a mortgage, and the bank won't approve a mortgage without it, and often offer their own insurance plan, if this law is in place, it would be relatively easy for the banks to make sure there is a clause in the insurance contract that they first payment will be approved within a reasonable amount of time.
ReplyDeleteThe Banks and the Insurance companies have the upper hand. They should be forced to sort it out payment among themselves without putting an extra burden on a grieving family (The whole point of the insurance is to make life easier for a grieving family as they are not at risk of loosing a home after the death of the principle income-earner)