Military Financial Advice - Army Times

Consumer Watch: Waiting on help for homeowners

With the moving season upon us, military homeowners caught in the sour housing market have been asking me for advice.

Defense officials have just issued guidance for implementing the expanded Homeowners Assistance Program, which will provide financial relief for some of those military homeowners.

But the Army Corps of Engineers, which runs the program, can’t start processing claims until interim rules are published in the Federal Register — a government requirement that officials said likely won’t be met until early July, although defense officials are trying to speed things up.

Meanwhile, if you’re supposed to be at a new duty station in the next few weeks, what do you do while waiting and hoping for HAP help? Sell your house for less than what you owe on the mortgage? Leave your family behind? Rent your house?

Congress appropriated $555 million for the expanded HAP. As expected, defense officials said priority will go to relocating spouses of those who died in the line of duty after Sept. 11, 2001, and to wounded warriors relocating for medical treatment or retirement.

Those forced to relocate because of 2005 base realignment and closure decisions or forced to sell homes because of permanent change-of-station orders are eligible, but their time windows are limited.

If you are facing PCS now, here are some things to consider:

• If you think you might qualify for the program, apply. Instructions and guidelines are at hap.usace.army.mil/.

• The law is retroactive, but for those affected because of PCS moves, the PCS orders must have been received between Feb. 1, 2006, and Dec. 31, 2009. The end date is based on Defense Department projections of when funds will run out; it may be reviewed if there’s enough money.

• PCS homeowner claims must be submitted by March 31, 2010.

• The law limits aid for those in the BRAC and PCS categories to homes purchased before July 1, 2006.

• The government will pay a percentage of losses on private sales or will buy a home at a percentage of the prior fair-market value. The purchase price of the house will be used as the prior fair-market value.

• Defense officials want to avoid buying homes, said Joe Sikes, director of the Pentagon’s office of housing and competitive sourcing. It’s costlier, so fewer people would get assistance. This option won’t be allowed unless a home is on the market for at least 120 days and priced to sell.

For PCS and most BRAC homeowners, if the government buys your home under the HAP program, it will pay you 75 percent of the prior fair-market value. Wounded warriors, wounded civilians and surviving spouses would receive 90 percent of the prior fair-market value.

• Renting out the home does not preclude you from getting benefits. The Corps of Engineers will work on a case-by-case basis with those who rent out a home after previously being unable to sell it, Sikes said.

• The program also will reimburse losses in private sales at 90 percent of prior fair-market value (95 percent for wounded warriors, wounded civilians and surviving spouses).

What if you’ve had your house on the market and get an offer that’s $50,000 less than what you owe on the mortgage? If you have the money to take to the closing table, you might be reimbursed for part of it later, depending on whether you are approved under the HAP process. Some service members have taken out bridge loans.

If you don’t have the money to take to closing, consult your real estate agent and legal assistance office.

• You’ll have to pay taxes on any financial assistance that is unrelated to a decline in fair-market value resulting from a BRAC announcement.

• You must experience a 10 percent loss between the purchase price and sale price of your home, and it must be in an area that has suffered a 10 percent or greater decline in home values.

• There is a cap on home values — $417,000 to $729,750, depending on the area.