NU Online News Service, June 29, 10:15 a.m. – Citigroup Inc., New York, will no longer offer a single-premium credit insurance product, according to published reports.
The product, maligned by politicians and community activists, covers a homeowner’s mortgage payments in case the policyowner loses her job, becomes seriously injured or dies, according to the report.
Activists say the product takes advantage of low-income people because it is paid for over the life of the mortgage ? a sum that can be equivalent to a 15% or 20% interest rate, the report says. It goes on to say that if the product were sold separately as a life insurance or employment insurance policy, the charges wouldn’t be nearly as high.
U.S. Sen. Charles Schumer, D-N.Y., and activists hope other home-loan companies will follow Citigroup’s lead and curb aggressive lending practices, the report says.