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If you're selling at a loss due to PCS, expanded HAP can help

Jun. 14, 2010 - 11:33AM   |   Last Updated: Jun. 14, 2010 - 11:33AM  |  
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Army Corps of Engineers officials expect to catch up by November on the avalanche of applications they have received for the Homeowners Assistance Program.

But their ability to do that will depend on the number of applications they receive during this summer's busy permanent change-of-station period.

So, military homeowners facing a PCS move have to do some research and make some decisions.

Do you sell your house? Do you have a choice? If the market has plunged in your area, what are your options if the sale price on your house is significantly less than what you owe on your mortgage?

The temporarily expanded Homeowners Assistance Program, enacted in February 2009 and officially launched Sept. 30, may provide some relief if you meet eligibility requirements. For those in the permanent change-of-station category, for starters:

• You must be reassigned to a new duty station or home port outside a 50-mile radius of your current duty station, and the effective date of the reassignment must be from Feb. 1, 2006, to Sept. 30, 2010.

• The property must be your primary residence.

• It must have been purchased (or the contract to purchase must have been signed) before July 1, 2006.

Complete eligibility requirements are available http://hap.usace.army.mil/">online.

Wounded warriors relocating for medical treatment get top priority under the expanded HAP, then surviving spouses of those killed in the line of duty on deployment, then those affected by base realignment and closure, then those affected because of PCS orders.

If you apply, your district office should contact you by e-mail or phone within five days to let you know the application has been received. Within four weeks, you will be notified about whether the application is complete and whether you are eligible.

Don Chapman, assistant manager of HAP, recommends patience, though he understands it's difficult when you're in this situation. He says the large volume of phone calls to the district offices takes away from their time to tackle the mission.

About 96 percent of the 8,256 applications so far are in the PCS category. To date, about 15 percent of applicants entered into the system have received benefits totaling $170 million, said Gene Pawlik, a spokesman for the Army Corps of Engineers, which administers the program.

Of the remainder:

• 12 percent have been determined eligible. Officials are just waiting for them to bring a buyer to the closing table.

• 38 percent are waiting for more documentation from the owners.

• 18 percent have been deemed ineligible.

• 17 percent are still being processed.

While the number of new applications has slowed from about 200 a week to between 50 and 100 a week, Pawlik said, HAP officials expect weekly applications to increase significantly because of PCS moves this summer.

If you receive PCS orders, get referrals for real estate agents from trusted friends. Find out what sale price you could reasonably expect. While some housing markets have been recovering from the meltdown in prices, you still may not get enough money to pay off your mortgage at the closing table.

Chapman recommends that you apply to HAP at least a couple of months before your scheduled move. Because of the backlog, the process won't happen quickly — but these transactions don't happen quickly anyway.

Once all the approvals are complete, HAP can come with you to the closing table with the benefit check. You still must find a buyer, however.

So the timing will be tricky. A family may have to consider whether to temporarily stay behind while the service member moves to the new job. Or if you find a buyer before the HAP approval comes through, you might consider asking your buyer to rent the house until the HAP process is complete.

Don't jump the gun on a short sale or foreclosure before HAP approval. HAP can't do much for you after the fact.

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