MassHousing, a quasi-public state agency that makes and insures home mortgage loans, is providing no-cost, job-loss protection coverage to borrowers who become unemployed. The new benefit, called MI Plus, makes the principal and interest payments on a homeowner’s mortgage for up to six months in the case of unemployment.
“Losing a job can turn the American Dream of Homeownership into a nightmare,” said Governor Mitt Romney. “With MassHousing’s new mortgage insurance product, homeowners will have some peace of mind that if they lose their job for a period of time, they won’t have to worry that they will lose their house.”
MassHousing’s MI Plus coverage is included automatically on every mortgage loan that is insured by MassHousing on or after July 1, 2004. These include all MassHousing-financed loans where the borrower makes less than a 20 percent down payment, as well as loans made by private lenders who select MassHousing as the mortgage insurer.
For decades, home buyers who put less than 20 percent down have been required to pay mortgage insurance, which protects the lender in the event of foreclosure, but provides no tangible benefit for the borrower. Although this insurance encourages lenders to make low-downpayment loans, many borrowers tend to see mortgage insurance as a product that they have to pay for but that only protects lenders.
In order to be eligible to make a claim using MI Plus, a homeowner whose loan is insured by MassHousing must:
- Live in the property that is the subject of the mortgage loan
- Have made at least six monthly mortgage payments
- Provide MassHousing with proof that they are receiving unemployment benefits from the Massachusetts Department of Unemployment Assistance
- Not have collected more than four weeks of unemployment over the previous 12 months prior to filing for their initial benefit.
If a borrower is eligible, MI Plus will cover the principal and interest payments, up to a maximum of $2,000, for up to six months during the first 10 years of the mortgage. The six months can be taken in any combination, i.e one benefit period of six payments, two benefit periods of three payments, etc.
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