New State Program Helps With Delinquent Mortgages

New Jersey has announced the new Emergency Rescue Mortgage Assistance program (ERMA). This program can grant up to a $35,000 forgivable loan to NJ homeowners who have fallen behind on mortgage or property tax payments due to the COVID crisis.

Topics chosen for our blog often deal with information that pertains to business owners and their businesses. That said, business owners are often homeowners too. Over the last couple of years, many have been forced to focus on what was needed for their business at the expense of their finances at home.

In this article, I’ll be going over all the details of ERMA homeowners need to know. What the requirements of the program are, who’s excluded, and what actions are necessary to get the funds.

What Are the Requirements to Qualify For ERMA?

New Jersey’s requirements for ERMA applicants are rather limited. Applicants must own their home, reside in the structure, and have experienced demonstrable financial hardships related to their property due to the COVID pandemic.

Those are the three major points, but further points have to be considered as well. The homeowner must show their income is less than 150% of their Area Median Income (AMI). If you’re not familiar with AMI, that’s okay; the New Jersey Housing and Mortgage Finance Agency (NJHMFA) has put out a convenient AMI table that will help you figure out whether your household qualifies.

There is also a 4-unit maximum on any given property. That means that for those who live at their property and also rent units from that same property, you can’t have more than three additional units available to be rented. Even if you’re not currently renting them all, your property can have no more than four units.

Although it’s redundant to say after noting that applicants must live at their property, to be clear, it can’t be a second home or investment property. These properties don’t qualify.

Lastly, as I mentioned in the first paragraph of this section, homeowners must demonstrate that their delinquency is a result of the COVID pandemic. That means that applicants must have been current with property tax and mortgage payments as of January 21st, 2020.

What Do I Need to Apply For ERMA Funds?

Those interested in applying for ERMA funds should head over to the ERMA portal run by the state. Before doing this, make sure you have access to all your primary documents related to your work, mortgage, banking, and tax information.

The following are what the NJHMFA website notes as required:

  • Government-issued ID
  • Four weeks of documents showing income
  • Two months of bank statements for all non-IRA accounts
  • Tax returns going back to 2019 and IRS form 4506-C
  • Most recent mortgage statement
  • Proof of income for self-employed individuals
  • Proof of COVID-related financial hardship

All the required documents above apply to each adult residing at the property; this includes any adult children or parents that live there, even if they’re not on the mortgage or have anything to do with managing the household’s finances.

When Should I Start My ERMA Application?

February 8th, 2022, at 9 am, is when the ERMA portal opens up. That means that if you’re reading this, it’s time to get going on your application. The documents required for the application are not difficult to obtain; it’s just time and effort.

What Can I Use ERMA Money For?

Recipients of ERMA funds can use their money for anything related to the ownership of their property. This includes mortgage payments (principal and interest), property taxes, homeowners insurance, property liens, and mortgage reinstatements.

The money can’t be used to make new investments and is focused solely on helping homeowners get back on solid financial ground for their primary residence.

What Are the Terms of the ERMA Loan?

ERMA loans homeowners up to $35,000 in the form of a three-year, forgivable loan. No payment or interest is due on the loan for three years. During this time, a lien will be put on the property. So long as the homeowner doesn’t change residences or sell the property, the loan will be forgiven.

Refinancing a mortgage after accepting ERMA funds is okay if it’s for a shorter term or a lower rate.

Wrapping Up and Rolling Out

This is a great opportunity for anyone committed to remaining a NJ homeowner and resident for the near future. There aren’t a ton of requirements, there isn’t a long period that borrowers are held down by this loan, and if all goes well, it ends up being a grant.

What’s not to like?