Yesterday the federal Department of Housing and Urban Development unveiled a new program designed to help unemployed homeowners stave off foreclosures.
Unlike many prior programs, this one has the look of something that might work, and it will soon be available here in Massachusetts.
Unemployed homeowners may be able to borrow up to $50,000 to help them make monthly mortgage payments — and in some cases not have to pay the money back — under the program unveiled yesterday that allocates $61 million to Massachusetts.
The program will offer zero-interest loans program to several thousand homeowners in the state who are facing foreclosure because they lost their jobs and have depleted their savings, according to Shaun Donovan, secretary of the Department of Housing and Urban Development.
In some cases, the government loan could actually turn into a gift, officials said. Under the program, as much as $50,000 can be borrowed over two years, depending on the applicant’s qualifications. Borrowers who remain in their homes and stay current on mortgage payments for five years after that will not have to pay back all of the money; for those borrowers, the government will reduce their loan balance by 20 percent annually until it is eliminated, according to HUD.
So if you can rescue yourself with this loan program, the loan could be entirely forgiven in about ten years in you manage to stay afloat that long.
One of the qualifications, though, is that you can’t have too much other debt. Borrowers must have a “reasonable likelihood of being able to resume’’ paying their mortgage after two years by proving they did not have a high amount of debt before they became unemployed.
A bankruptcy filing might help some Massachusetts homeowners in this regard; it would be a way to wipe out extraneous debts, in order to qualify for the zero-interest loans.
If you have questions about this new program, watch this space, or give me a call at (978) 975 – 2608.
By Doug Beaton