Loans could tide over HAP homeowners - Military Housing, rentals, home buying, real estate, VA home loans - Navy Times

Loans could tide over HAP homeowners

Military financial institutions could help military homeowners with low-interest, short-term loans while they await payments under the expanded Homeowners Assistance Program, a Defense Department official said July 22 at a Defense Credit Union Summit.

Don Chapman, assistant HAP manager for the Army Corps of Engineers, said short-term loans could help service members who are “upside down” on their mortgages, owing more than the selling price of the home. These homeowners are unable to cover the costs of the mortgage payoff and closing. The loans could help service members who are forced to relocate for reasons beyond their control and who have seen steep drops in their home’s value in the current mortgage crisis.

The expanded HAP, part of the economic stimulus law enacted Feb. 17, covers certain service members with permanent change-of-station orders, certain wounded warriors and forward-deployed civilians relocating because of medical treatment or medical retirement, surviving spouses, and those affected by base realignments and closures.

No applications can be processed before the Defense Department publishes the rules for the program in the Federal Register, which sources said should happen very soon.

As of July 23, officials have received 3,546 applications for the expanded program. Forms are available online.

Officials can’t put complete information about the rules for the new program on their Web site until the rules are published in the Federal Register.

Chapman said officials have set aside about $55 million to help wounded warriors and surviving spouses, out of the $555 million in funding provided for the program. About 30 people in those categories have applied for the program so far. But the law is retroactive to Sept. 11, 2001, and applies in the future for homeowners in those categories.

The law and the Pentagon’s proposed rules place more restrictions on time windows for those affected by PCS moves and BRAC actions. Officials have set aside $208 million for those affected by BRAC and the rest for those in the PCS category until the money runs out.

Chapman told credit union officials that these eligible homeowners still will have to sell their homes before the program can help them. Although the law, and the draft rules, allow the government to buy the home, the government wants to avoid doing so as much as possible because it is more expensive and will mean the money won’t go as far to help as many people, Chapman said.

Since February, defense officials have been hammering out their rules for implementing the law and are now in final discussions with the Office of Management and Budget before they are published in the Federal Register. A big hurdle has been the requirement that the HAP payments be taxed as income, with the money withheld upfront. Officials are reportedly close to resolving that issue.

Who gets help first?

Homeowners who already have sold their homes will be the first to get help under the expanded Homeowners Assistance Program, Chapman says. Since the program is retroactive, those affected should go ahead and try to sell their home rather than wait for the program to kick in, he said.

Applications from wounded warriors and surviving spouses will be processed first. “We will do all others based on their PCS date or when the home was sold,” Chapman said. “Obviously, an applicant who signed up in February would be ahead of those who signed up in March. But if people in March already sold their home, and the people in February haven’t been able to sell it, we can help those in March right away.”

Once the program catches up with the backlog of applications, officials will try to meet homeowners at the closing table so they won’t have to take the loss, he said.