Local home prices have stabilized, but one Chicago lender is courting homeowners bracing for another downturn, offering mortgages that come with protection against falling prices. 
1st Advantage Mortgage, a subsidiary of Chicago-based Draper & Kramer Inc., debuted a loan this month that pays borrowers as much $10,000 if a local house price index declines between the time they take out a loan and when they sell their homes. The price protection covers $100,000 in home equity for five years. 
Paul Lueken, president of Lombard-based 1st Advantage, is betting the innovation will give his firm an edge in the competitive residential lending business while memories of the housing crisis are still fresh. 
“I'm truly hoping that my sales force gets picked more often on loans that wouldn't have been picked before,” Mr. Lueken said. “This might be a deciding factor.” 
The product, called Value Guard, would have hardly garnered attention a decade ago, when home values were soaring. But more homeowners might be receptive to the idea given what they have just lived through. The Case-Shiller Index of Chicago-area single-family home prices was 5.1 percent higher in February than it was a year earlier, but was still down 34 percent from its peak in 2006.