Mortgage crisis hits BRAC-affected homeowners hard - Military Housing, rentals, home buying, real estate, VA home loans - Navy Times

Mortgage crisis hits BRAC-affected homeowners hard

The broad effects of the housing mortgage crisis will prevent nine out of 10 homeowners affected by base closure and realignment actions from receiving financial help under the Homeowners Assistance Program, according to Army Corps of Engineers officials who manage that program.

“The ... nationwide depression of real estate markets makes it virtually impossible to identify any market decline caused by the BRAC ’05 announcement,” stated an internal document used by the Corps of Engineers to propose additional assistance for these homeowners.

To bring HAP to a particular community, officials must first show the market decline that was in fact caused by BRAC. Since 88 percent of BRAC-affected homeowners are assigned to small installations that have a relatively small impact on the local economy, or are on installations in large metropolitan areas, they have no hope of assistance as they face either job loss or relocation.

The Corps of Engineers estimates that 56,110 service members and 37,649 civilian employees are in areas affected by BRAC ’05. Of those, an estimated 7 percent — about 6,510 people — own homes and would apply for assistance.

To qualify for aid under HAP, a service member or federal civilian must be the owner and occupant of a home at the time a base closure or cutback is announced.

To determine whether real estate prices in an area have dropped as a direct result of a BRAC announcement, officials compare home values before and after the announcement and when employees leave the area, said Don Chapman, who manages HAP for the Corps of Engineers.

Officials look at communities’ economic dependence on the installation, the amount of time homes are on the market before and after a BRAC announcement, numbers of foreclosures before and after, and the impact on communities close to and farther from the installation.

Under current requirements, most areas will not qualify for HAP, Chapman said.

In Georgia, for example, those at Fort McPherson, Fort Gillem and Naval Air Station Atlanta are probably out of luck.

“We will never be able to show that those small installations had a large enough impact on the market,” Chapman said.

“About 2,000 people are relocating with the Defense Finance and Accounting Service. I can’t help them.”

So far, only Naval Air Station Brunswick, Maine, has qualified as a HAP location, because “the market close to the installation was depressed much more than markets farther away,” said Chapman.

But officials advise service members who think they might be affected — even if they’re not sure their area will qualify for HAP — to apply for the program before putting their house on the market, because a lot of information must be collected.

In some cases, the process takes several years, so officials need to be able to locate service members later. In a previous BRAC round in the 1990s, it took more than 10 years to certify Edwards Air Force Base for HAP, and by then officials could locate only a few of the roughly 300 homeowners who qualified, Chapman said.

HAP provides four options to reduce losses on a home sale. The government can:

• Reimburse the homeowner for part of the loss.

• Help the homeowner pay off the mortgage if proceeds from the sale are not enough to cover the mortgage.

• Buy the home by paying off the mortgage.

• Help if the homeowner has defaulted on the mortgage.

Chapman said “a large number” of service members and Defense Department civilians at BRAC bases “are seriously impacted.”

They know they will be reassigned elsewhere, he said, and are facing “an incredible loss on their homes. At any other time in our history, they wouldn’t take a loss. A civilian could stay and wait it out.”

The Corps of Engineers has proposed that defense officials ask Congress to extend program benefits to more homeowners in BRAC areas who suffer financial loss because of the current mortgage market. But even if defense officials agree, a proposal would not go to Congress until the fiscal 2010 budget cycle.

Chapman said such a proposal is being considered by senior Army leaders. But Army personnel officials are opposed, contending that no analysis has been done to support the money that the Army would have to spend, starting with $93 million in fiscal 2010, according to an Army planning document.

A separate proposal by the Corps of Engineers to extend HAP benefits to service members who must relocate due to ordinary permanent change-of-station moves was rejected by senior Army officials.

Chapman said he has received calls from a number of commands — including Air Combat Command at Langley Air Force Base, Va., the Army Special Operations Command at Fort Bragg, N.C., and others — asking what can be done to help their service members who are making PCS moves and having trouble selling homes.

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For more information or to apply for HAP, call toll-free (888) 363-4271 or visit the Web site.