State-issued equity coverage would pay out the difference between a home’s insured value and its eventual sale price — provided the owner has lived in the property for at least three years.
Claims would be denied if the equity loss stems from owner neglect of the property’s condition.
A newly created Home Equity Protection Insurance Fund would function as a revolving reserve, supported by policy premiums and maintained at a minimum of 20% of insured exposure.
Investments of fund assets would follow conservative banking or Treasury-backed instruments to ensure liquidity and capital safety.
If enacted, the bill could introduce a state-subsidized public competitor into the real estate insurance space – albeit narrowly tailored to protect homeowners from equity loss, not traditional hazards. While the coverage is distinct from standard homeowners insurance, the program might still influence consumer behavior, lender risk mitigation strategies, and private mortgage insurance dynamics in the affordable housing market.
