New Jersey has revised the HomeKeeper program to make its $300 million federal funding more available to the state’s needy families. This program was designed to help struggling homeowners who are at risk of foreclosure directly caused by unemployment or underemployment to stay in their homes. Approximately 1,000 homeowners have taken advantage of this debt relief program.
Under the HomeKeeper program, homeowners can take out a zero percent mortgage loan of up to $48,000 on their primary home. This loan can be paid off in full at five years or when the home is sold before then. If the homeowner still lives in the home after five years, the program’s lender will forgive the mortgage loan at a rate of 20 percent per year until the 10th year, when the lender will forgive the loan entirely.
To receive the benefits of the HomeKeeper program, the underemployed person must demonstrate a drop in income of 15 percent instead of the previously required 25 percent. People can apply for the loan no matter when they purchased their homes. People who have been unemployed for up to 3 years may be eligible under the program even if they are not eligible to receive unemployment benefits.
These changes, which took effect Sept. 1, were made to get distressed New Jersey homeowners the financial assistance they need in the shortest amount of time. However, there may be adverse income tax consequences associated with this program. New Jersey homeowners may wish to consult with an experienced bankruptcy attorney to determine if this program is right for their situation or if other steps should be taken.
Source: NBC News, “HomeKeeper program revised to assist more homeowners,” Peg Quann, Sept. 12, 2012