An insurance policy that would protect home owners from losing equity in their homes may have sounded too good to be true to some home owners — and apparently it was. “Home Value Protection” has recently been pulled off the market.

Between 2006 and 2011, about $6 trillion in home equity was lost among U.S. home owners. Some home owners saw equity in their homes drop by 20 percent or more. So an insurance policy that offered protection against equity losses seemed like a “game changer” to many in the real estate business, Inman News reports. 

Home Value Protection insurance policy was first introduced in Ohio last fall and then rolled out to a few other states. It was expected to soon be available nationwide. But earlier this month, insurance agents who were selling the policies were instructed to stop. The agents were told in an e-mail from company officials that the protection plan was being suspended, Inman News reports. 

The company reportedly will service policies that are already underwritten, but it will not be accepting any new policies until further notice. 

The media has been unable to get an official comment from the company on the status of the insurance or for further information about why it’s being suspended. 

Some customers have had some objections to how the policies worked. For example, as Inman News columnist Ken Harney explains: “Policies came with mandatory deductibles — 10 percent of the ‘protected value’ during the first 12 months of coverage, and 5 percent during the second 12 months. In effect, if you had to sell your house at a loss within the first two years, the big deductible would limit your equity protection payout significantly.”

Source: “Home Equity Protection Insurance Yanked Off the Market,” Inman News (July 19, 2012)