What is the NJ HomeKeeper Program?
The NJ HomeKeeper Program is a state program administered by the New Jersey Housing and Mortgage Finance Agency (HMFA) to help New Jersey residents avoid foreclosure and stay in their homes. The program provides zero percent interest rate loans to homeowners who, through no fault of their own, are struggling to make their mortgage payments due to circumstances like unemployment, reduced income, or financial hardships.
According to the NJ HMFA, the goal of the NJ HomeKeeper Program is “to help homeowners bridge the gap between their current situation and future prospects so they can get back on their feet and make their mortgage payments” (source). The program aims to prevent avoidable foreclosures and stabilize communities in New Jersey.
To qualify for the NJ HomeKeeper program, applicants must meet certain eligibility criteria related to income limits, mortgage delinquency status, and demonstrated hardship. The program provides up to $48,000 in assistance which can be used to bring a mortgage current or make monthly payments for up to 24 months. Assistance is provided in the form of a zero percent interest rate second mortgage.
Eligibility Requirements
To qualify for the NJ HomeKeeper Program, homeowners must meet certain income limits, mortgage requirements, and property requirements.
Income limits: Total household income must be at or below 140% of the area median income for the county where the home is located. Income is evaluated based on the homeowner’s gross annual income for the entire household.
Mortgage requirements: The homeowner must have an unpaid principal balance up to $448,000 on their primary mortgage loan. The mortgage must be at least 2 months delinquent or in imminent default. The loan must have originated prior to January 1, 2009.
Property requirements: The home must be the homeowner’s primary residence and be located in New Jersey. It must contain 1-2 units. Non-owner occupied, investment properties are not eligible. The home value must be less than $512,000.
Sources:
https://home.treasury.gov/system/files/136/New-Jersey-Hardest-Hit-Fund-Program-Requirements.pdf
https://www.nj.gov/dca/hmfa/homeowner/covid19/
How to Apply
To apply for the NJ HomeKeeper Program, you must complete an online application available at https://www.nj.gov/dca/hmfa/foreclosure/. The application process involves providing details about your financial situation, household income, assets, and the amount of assistance you are requesting.
Required documents to include with your application are:
- Hardship letter explaining your financial difficulties
- 2 most recent pay stubs or benefit statements for all household members
- 2 most recent bank statements for all accounts
- Most recent federal tax returns for all household members
- Most recent mortgage statement
There is no application fee to apply for NJ HomeKeeper assistance. You will need to provide documentation to verify all information on your application.
Assistance Provided
The NJ Homekeeper Program offers several types of financial assistance to homeowners who qualify. The main forms of assistance include:
- Mortgage payment assistance – Homeowners can receive up to $48,000 to cover mortgage arrearages and/or monthly mortgage payments for up to 24 months. This assistance takes the form of a 0% interest, deferred payment loan.
- Property tax arrearages – Up to $12,000 is available to bring property tax payments current.
- Utility payment arrearages – Up to $5,000 can be provided to cover past due utility bills such as gas, electric, water, and sewer.
The total loan amount cannot exceed $48,000 per household. The loan terms are structured as a 0% interest, non-amortizing loan with no monthly payments required. Half of the loan balance is forgiven after 5 years, and the remainder after 10 years, as long as the homeowner continues to occupy the property.
Sources: https://www.nj.gov/dca/hmfa/homekeeper/faqs/
Making Payments
The HomeKeeper Program is a zero-interest, deferred payment loan, meaning borrowers are not required to make payments while they participate in the program. The loans are non-amortizing, so borrowers do not pay down principal or accrue interest during the loan term. Borrowers must continue to pay property taxes and insurance, as well as comply with the terms of any non-NJHMFA lienholders.
The loan term runs for a maximum of 48 months. At the end of the loan term, borrowers must repay the loan balance in full. The loan repayment options include refinancing into an affordable mortgage product, selling the property and either satisfying the HomeKeeper loan at closing or satisfying any unpaid balance from the net proceeds, or making a lump sum payment. NJHMFA does not offer loan extensions at the end of the 48 month term.
To request a payoff quote or satisfy the loan, borrowers must submit a HomeKeeper Payoff Request form along with any required documentation. This form is available on the NJHMFA website at https://www.nj.gov/dca/hmfa/families/homekeeper/. Borrowers should allow 30 days for payoff processing.
If a borrower is unable to repay the loan at maturity, NJHMFA will review the account for options to avoid foreclosure, including a deed-in-lieu of foreclosure. As a last resort, NJHMFA may commence foreclosure proceedings.
Refinancing and Selling
The NJ HomeKeeper Program allows homeowners some flexibility when it comes to refinancing or selling their home while enrolled in the program.
If a homeowner wishes to refinance their existing mortgage, they must first obtain approval from the New Jersey Housing and Mortgage Finance Agency (NJHMFA). Any refinancing must result in a reasonable reduction in monthly mortgage payments for the homeowner. According to the NJHMFA, the HomeKeeper loan can be subordinated to the refinanced first mortgage, meaning the HomeKeeper loan will become lower in priority and must be paid off if the first mortgage goes into default [1].
If a homeowner wishes to sell their home while enrolled in the NJ HomeKeeper Program, the full amount of assistance received must be paid back to the NJHMFA from the net proceeds of the sale. The HomeKeeper loan acts as a second mortgage and will need to be paid off first before the homeowner receives any proceeds from the sale [2].
Foreclosure Prevention
The main goal of the NJ HomeKeeper Program is to prevent foreclosure for eligible New Jersey homeowners who are facing financial hardship. The program provides loans to cover mortgage arrearages and ongoing mortgage payments to help homeowners avoid foreclosure.
According to the New Jersey Housing and Mortgage Finance Agency, the NJ HomeKeeper Program “was created to assist homeowners experiencing financial hardship due to a loss of income to make their mortgage payments and prevent avoidable foreclosures.”
The program can provide up to $48,000 in financial assistance. These funds can be used to cover past due mortgage payments as well as ongoing monthly mortgage payments for up to 24 months. This temporary assistance gives homeowners time to get back on their feet financially without losing their home.
To be eligible, homeowners must be facing hardship through no fault of their own, such as job loss, reduced income, death of a spouse, or other documented financial challenges. Applicants must also meet income limits and other requirements. The home must be the primary residence with an outstanding mortgage balance of $500,000 or less.
The NJ HomeKeeper loans are 0% interest deferred payment loans. No payments are required until the homeowners sells the property, refinances, or otherwise pays off the mortgage. This allows struggling homeowners to avoid foreclosure and remain in their homes during difficult financial times.
Credit Score Impact
The NJ HomeKeeper Program does not negatively affect your credit score or report. According to the HHF New Jersey Date, the mortgage loans provided through HomeKeeper are 0% interest rate deferred-payment loans. This means borrowers are not required to make any payments on the loan for an initial period of 5 years. Since no payments are due, the loan does not get reported to the credit bureaus and thus does not impact the borrower’s credit score or report.
The key benefit is that HomeKeeper allows borrowers facing financial hardship to get temporary mortgage assistance without damaging their credit. This gives them time to get back on their feet financially before having to start making principal and interest payments on the loan. However, it’s important to note that any missed payments or delinquencies on the first mortgage will still affect credit as normal.
Tax Implications
Homeowners who receive financial assistance through the NJ HomeKeeper Program may be eligible for certain tax deductions and benefits. According to research from the National Consumer Law Center [1], homeowners who receive mortgage assistance payments can exclude those payments from their gross income for federal income tax purposes. This means homeowners do not have to claim the NJ HomeKeeper assistance as taxable income.
Additionally, homeowners may be able to deduct any mortgage interest paid in the tax year, even if part of the interest was paid by the NJ HomeKeeper Program. Homeowners should consult a tax advisor to fully understand their individual tax situation if they receive NJ HomeKeeper assistance.
Additional Resources
There are various places homeowners can go to learn more about the NJ HomeKeeper Program and get assistance with their application:
The New Jersey Housing and Mortgage Finance Agency (NJHMFA) website has details on eligibility requirements, how to apply, and updated news on the program: https://www.nj.gov/dca/hmfa/homekeeper/
NJHMFA has a toll-free HomeKeeper hotline at 1-800-654-6873 where homeowners can speak to a housing counselor for help with applying or questions on the program.
HUD-approved housing counseling agencies in New Jersey can also provide assistance with HomeKeeper applications. Find a local counselor: https://www.hud.gov/findacounselor
The New Jersey Housing Resource Center has support available as well through their Foreclosure Mediation Assistance line at 609-278-7100.
Homeowners struggling with mortgage payments can also contact NJ Citizen Action at 1-800-656-9637 for foreclosure prevention help and referrals.