Many of you are extremely frustrated as you wait to find out whether you will get help from the expanded, $555 million Homeowners Assistance Program, designed to help certain military and federal civilian homeowners forced to relocate amid steep drops in housing values.
At a recent summit of defense credit unions, an official with HAP said financial institutions could help service members by providing short-term loans as the homeowners await the start of the expanded program.
Could this be an option for you? If you must sell your house, and the house sells for less than the outstanding amount of the mortgage, you might apply for a loan for the balance. If you qualify for a loan, you could take that money to the closing table and conclude the deal.
For example, let's say the mortgage balance on your house is $150,000 and you sell it for $125,000. You need an extra $25,000 to pay off the mortgage at the closing table. In a perfect world, if you qualified for the expanded Homeowners Assistance Program, it would provide the money to pay off the mortgage balance when you close. But the new HAP is not operating yet, and once it starts, there are some 4,000 applicants to work through, so timing anything to your needs right now is impossible.
If you could qualify for a $25,000 loan from some financial institution to get you through the sale, HAP could later reimburse you — assuming you qualify for HAP. At this point, there are no guarantees about who will qualify because the final regulations have not been published.
A HAP official said that once those regulations are published. HAP can reimburse qualified applicants who have already sold their houses within a week or so.
The expanded HAP benefit is also retroactive, by law, to two categories:
• Wounded warriors and surviving spouses — retroactive to Sept. 11, 2001. These homeowners will get first priority and currently make up about 2 percent of the applicants.
• Service members affected by permanent change-of-station moves — retroactive to those who received PCS orders on or after Feb. 1, 2006.
Those affected by PCS and those affected by base realignment and closure must have purchased the homes before July 1, 2006. You're going to have to sell your home or make a serious effort to sell it. Details of those requirements also will be in the Federal Register.
Check with your military-related credit union or bank, many of which are located on base. "Knowing our member credit unions as I do, if they are able to assist they will make every effort to do so," said Roland Arteaga, president of the Defense Credit Union Council. But troops must take that step and approach the lender, he said.
Navy Federal Credit Union has a policy to work with their members individually, spokeswoman Jennifer Sadler said.
These loans are not new for military banks, either, said Andrew Egeland Jr., president of the Association of Military Banks of America. For example, Armed Forces Bank, one of the larger military banks, "has made available bridge loans as well as other types of loans to qualifying customers that may need assistance with financial issues caused by assignment relocations," he said.
But everyone has to consider his own circumstances. Coast Guard Lt. Kyle Arnett's Virginia Beach, Va., house is on the market for $40,000 less than what he and his wife owe on the mortgage. That means they would have to pay $40,000 at the closing table to sell the house. They might qualify for a bridge loan for $40,000, but he knows there is no guarantee they would get the money from HAP, although it appears initially that they would qualify.
"If we don't get the money from HAP, we don't want to take the $40,000 loss. We would rent it out," said Arnett, who moved to El Paso, Texas, in July. He and his wife are paying for two houses — the one they're renting and the one that's on the market back in Virginia.
"My wife and I are trying to decide whether to abandon the HAP program. Do we rent our house?" Arnett said. "If we could sell without the HAP program, we wouldn't need the program."
Renting the house out, he said, would mean losing at least $500 a month because the rent wouldn't cover the mortgage payment — but it would be better than the $40,000 hit.