Homeowners’ Assistance Program
Aug 02 2009
Spoke to members of the HAP office Friday. Projection is that the Federal Register is due mid- to late- August. They are ready at the starting gate. They are ready to reimburse folks in the PCS category of applicants who have already sold their homes.
Heard a rumor that the cutoff date was changed from July 2006 to July 2008. Any truth to this??
It’s a rumor that the date was changed. There is some discussion about changing the date but it is doubtful. As things develop, or not, on the date, we’ll be in touch.
I have submitted my HAP application for a home I own in California outside of Edwards AFB. The house is worth ½ of what I bought it for in 2005. I currently still own the home and rent it for a loss each month. I meet HAP eligibility for the PCS benefit and want to take a proactive role in getting out from underneath this house. What is the recommended course of action to get through this process as fast as possible once HAP guidance is finalized in the Federal Register? Should I put the house on the market now? Wait until my HAP representative instructs me to? I understand there is very little chance of HAP doing a government acquisition, so I want to do everything I can to sell this house. Also, are there any updates on the tax implications of the HAP payout? I read the payout would be taxed and the homeowner would be responsible for the amount required to cover the remaining balance of the mortgage. Thanks for the help!
Any word if the funding recieved will be enough, wil lthey ask for more, or are we out of luck?
They got an extra 2.4 Million for Cash for Clunkers overnight. Dont see why we cant get more funds. They didnt have to wait for it to be published in the Federal Register. It needs to happen ASAP before i go crazy. Seriously.
2.4 Billion. Not Million
Joe,
I know they are debating if the benifit is taxable or not. As of now it still is, but I suppose that’s where the delay is. Haven’t heard of the homeowner being responsible for the difference, since the purpose of the program is to prevent such a huge loss to all of us. I still own my house near Chicago and now I’m renting in CA. Put the house up for rent and for sale 4 months ago, with no luck. I recommend you list your house ASAP for sale so when it’s your turn to get paid you may have an offer on it. Add on the listing that the sale will depend on government approval (kinda like a short sale). Maybe your renters now will agree to buy at a huge discount to them? That’s what I’m hoping for in my situation.
Back in May, the HAP posted the proposed implementation guidance from the Secretary of Defense. They received so many calls that they had to take it down three days later and posted a generic statement saying that they would post the guidance after it had run in the Federal Register. Three months later, there is still no word on what is going to happen with HAP.
For those who missed it on the website, here’s the worst of it: 1) surviving spouses and wounded warriors take precedence over active duty military and will be eligible for higher benefits; 2) “prior fair market value” will be construed to mean ‘original purchase price”–there will be no appraisals done; 3) the FNMA/FHLMC home conforming loan limits (generally $417,000 depending on location) will be used as a purchase price cap for eligibility; and 4) benefits will be calculated using lower percentages than authorized in the legislation.
So, if you paid more than $417K for your house, you’re probably out of luck. If you’re not a wounded warrior or surviving spouse, you’re probably out of luck. If you paid less than $417K and then put lots of money into the house, you’re out of luck.
I’ve developed a relationship with some HAP counselors and learned that they have been directed to remain tight-lipped about the implementation guidance. Apparently, there are some legal issues with the proposed policy–it apparently doesn’t comply with the ARRA legislation. So, we may see some changes but it doesn’t appear to be a priority (unlike “cash for clunkers” which was apparently more important).
Over the last few months of following HAP it became apparent that the gov’t wasn’t going to act fast. Other than ruining people’s good credit, the fear was losing security clearances and increased foreclosures and bankrupties. Of the dozen members at my last base (that PCSed & lost more than $100K) the worst I’ve seen is paying on homes they no longer own and damaged credit.
Has anyone seen worse?
What do you mean payng on homes they no longer own? Did the bank come after them for a defficiency judgement? I thought if you do a short sale you didn’t have to pay it back as long as you claim it on your taxes. I’m struggling to pay 2 mortgages with nobody renting the old house. Fighting with every last breath not to foreclose!
I’ve been asking other places…any word on if they are going to have enough money for everyone?
So is it safe to say that the previous requirements (at least when you could read them before they disappeared) may change as well? I’m concerned about the July 2006 date as I entered into a contract on my house in Jacksonville, FL in September 2006. I’m concerned that I will not qualify based on that alone. Jacksonville has been hit hard with home values dropping (with the big drop occuring early in 2007!!!). I can’t believe the lack of follow thru by our elected officials and our senior leadership. Always a lot of lip service about morale and yet they fumble the ball big time on this program.
The Military Family Tax Relief Act of 2003 specifically excluded most HAP benefits from taxable income. However, DoD does not think the 2003 act applies to the expanded HAP (although they would like it to apply). When I asked if HAP’s understanding was that the 2003 act did NOT apply to the expanded program, a HAP representative responded, “Yes. It is my understanding that attorneys at OSD level have reviewed the law and determined the current tax laws require that ARRA Expanded HAP applicants will be taxed on all program benefits above their home’s current fair market value as part of their gross income.” I am confident this was not Congress’ intent when they expanded HAP, since the Military Family Relief Act of 2003 and the Mortgage Forgiveness Debt Relief Act of 2007 both work towards reducing the tax burden due to mortgage debt relief. I urge individuals and MOAA to get involved to ensure Congress’ intent in expanding HAP is fulfilled.
All,
I submitted my application, with all of the requested information, to HAP in April and have waited patiently for the final guidance to be developed. At this time, the final guidance is being held up in the Office of Management and Budget and they have 90 days to review. I have been told that it has been in that office since late-July.
Like many of you, I continue to make payments on a house that sits empty and has lost approximately 40% of its value while I rent a house at my new duty assignment. I cannot rent the house I own because the house must be sold by 1 May 2010 per HAP guidance. I cannot sell at this point, even though I have a contract to sell the house, because I do not have the $155K to bring to the closing.
Well, my patience has worn thin and it is time for all of us to take action. I encourage all of you to begin a letter writing program to your Congressman and state Senators. You can also contact the Office of Management and Budget.
We volunteer to sacrifice our lives for this country, but are treated like second-class citizens as evidenced by the speed with which the Cash for Clunkers program was developed and funded. Please contact your Congressman and Senators.
If you were stationed at Patrick AFB, you can contact Congressman Bill Posey through the attached website or can contact his aide at Chris.Hill@mail.house.gov . http://posey.house.gov/
Col Kevin Murphy
Col Murphy:
I’m in the same boat as you–except worse. I finally got an offer on a house that’s been vacant for three years and I can’t go through with it because I don’t have the cash to close (savings gone, credit cards maxed). On top of that, I have another home that would qualify for HAP that I’m renting for $1200 less than the mortgage. I’ve called all over DC and despite the compassionate responses (surprising), they can’t do anything.
First time contributor to this forum, but have been actively involved with pushing Congress / others for resolution. It appears that “forgiven amounts” under the PCS HAP will not be a taxable event based on all of our latest info. Certainly welcome news and evidence that finally Congress is acknowledging the depth of this problem.
Our biggest concern, are the applicable percentages (ie. 95%, 90% or 75% of appraised value), specifically which apply to which circumstances. While it is our understanding that the appraised value will essentially be what you paid for the house, this could still leave a huge loss for the Military Family.
I am hopeful that we can gain enough support to move ahead with expanding the window for the PCS HAP coverage which limits it to homes settled before July 1, 2006. And while the government seems intent on throwing money at anything that would stick, why not a tax credit for those who have lost money on renting their homes and /or have sold at tremendous losses incident to PCS “orders!”
We also contend that long term, career military families should have parity in home purchase / sale benefits with other federal employees like the NCIS, CIA, FBI, and others whereby their settlement costs are paid and they have an effective safety net when ordered to move. If they can’t sell themselves, there is a buyout based on the average of two appraisals. Why wouldn’t we offer the same program to those on the point end?
Joe Gladden, VR SAM
Joe- For whatever it is worth, we would be happy to take a tax credit (dollar for dollar) against income for the loss we suffered with no cap!
Patty,
I agree! I retired several years ago and during our 25 years, we lost on three home sales. Finally made money on one but got to pay capital gains the last year they didn’t exempt the first $250K. Our losses hurt, but can’t compare to the financial disaster this generation faces with home losses.
Here’s my logic. There simply isn’t enough base housing and what exists is rarely adequate along with the long waiting lists. In some cases rentals are either too expensive and / or do not meet a family’s need for schools or whatever reason. They are hit / miss. And in other cases, Military Families simply want to share in the American Dream that they defend! What’s wrong with that?
Clearly a PCS (orders) move is a condition of employment, or even more if you have obligated service remaining. Thus a loss on a rental or sale of a home should be considered a business expense that should receive a tax credit, not just a deduction. As it stands now, while you can deduct rental losses to some extent, you can’t deduct a $50,000 home sale loss. Does that make any sense? Furthermore, a tax credit is something that could get through Congress rather quickly with the right support.
Now as a private citizen (retired) and I watch the government throw cash at just about anything, I have a hard time understanding why we can’t give our Military Families, the most deserving group (volunteers) I know, a tax credit when they face financial ruin…serving our country! Am I missing something?
Joe
Does it make sense that the East and West Coast HAP offices have two different interpretations of the program? The representative on the East Coast said that she was told by her higher headquarters that they would not buy out the mortgage as they would under the original HAP program. She said they would pay the difference based on the posted percentages. The West Coast representative said she is wrong and shouldn’t have told me that. Who do I believe?
I PCS in less than 10 months and it would be nice to get some assistance. I stayed in this area for my current set of orders due to the fact that my house has been listed for almost two years and is not selling. I was offered orders for instructor duty and have accepted under the impression that what was posted on the website would not deviate a whole lot.
I suppose I was mistaken…
V/r,
MAC
Joe – You are not missing anything. The bottom line problem is the DOD does not support money being spent on personnel. It takes away from operating budgets and weapon purchases, or so they think. I can blame Congress for a lot, but in this case, they are our best friends. The HAP program was passed with no apparent push from DOD. Wait until the guidelines are released, then we will really see how the DOD supports us. I hope that I am wrong, but I do not expect the new HAP program to resemble anything close to what our congressmen/women envisioned.
We are hearing disturbing news that if you PCSed before Feb 09, before the stimulus bill was passed, that you would not qualify for HAP money. This came from one of our posters who called a HAP office on the west coast. Basically, if you otherwise qualified, meaning a purchase before the July 1, 2006 date, but moved / rented out your house in Jan 09 that you would not be eligible for any HAP funds.
Again, more anecdotal info from those who have spoken to HAP offices who are still without official guidance. I am hoping that this is bad info.
Has anyone else comment on this?
Thanks. Joe
We need to “go viral” about this issue. Please, please, we’ve all been putting up and shutting up too long out of concern for our careers, our security clearances, whatever. This is JUST SO WRONG. For all of us in this boat, it’s time to make some waves. Write your elected officials, blog and Facebook and e-mail all over the place about it. We’ve waited long enough.
Tracy, couldn’t agree more! Pressure on Congress is the only way to get this fixed! And lots of it!
The site below has a link to pre-written letters and Congressional addresses. Pretty easy to use via drop down menus. This campaign, and the letters, were well underway well before the HAP was included in the Feb stimulus, and was probably a big influence on getting it in. Thus, it doesn’t include reference to the HAP and it’s associated problems / shortcomings, but it can be easily modified for folks to personalize their letters with HAP issues / personal circumstances.
Pretty east to follow the prompts, modify, print, address and mail.
Here it is and hope it helps.
http://www.moresam.net/ letter link in upper left of home page.
Probably a good idea to forward to as many like minded folks as possible. Parents can make a strong pitch as well.
Joe
Here is the link to the federal register that should answer as many questions that can be answered at this point.
http://www.federalregister.gov/OFRUpload/OFRData/2009-23418_PI.pdf
Regarding Tracy’s comment about “going viral,” nothing could be truer. I would encourage every military member in the NOVA / DC / MD area to make an appointment and a trip to their Congressman / Senator’s office and insist that they get engaged with this!
While there is progress, there are a ton of holes leaving folks out. And while there is progress, there is a degree of momentum that will be lost if not maintained.
Joe Gladden
I am unclear as to why there are price caps of home values. A person with a million dollar home they can’t sell when the get moved elsewhere to serve their country is going to fall just as hard as and possibly faster than a person with a $400k home. With a home that has been on the market for over 2.5 years and valued at more than the specified price cap for the area, we have lost through mortgage payments and property taxes every single penny we have worked so hard to earn and save and have nothing left and no hope for help. He will be awarded for his service duty with nothing but time spent, bankruptcy and the certainty of paying more taxes.
Katherine
Does anyone else have issues with the Maximum Home Purchase Price Limit (referred to as the prior fair market value or PFMV)?
My purchase price is over the PFMV by about $30K, but I also put over $125K down on the house. The value of the house is probably down about $150K. I am not in extremis financially on this house (great renters & rent covers most of my mortgage) but would be hard pressed to buy another house in the near future.
I am trying to understand the logic in tying the Maximum Home Purchase Price Limit to the Fannie Mae / Freddie Mac Conforming Loan Limits.
Is Congress saying that they will only help those people who put no money down and are facing foreclosure; however, if you have saved money and use that as a down payment, you are out of luck and can eat the equity loss?
Before commenting to the 30 Sep Federal Register Posting, I was wondering if anyone had some good insights that I could use or expand upon in my comments. Thanks.
Is anyone else going to comment on the 30 Sep Federal Register Posting? As of today, I was surprised that there were no comments.
John
Has anyone heard how long it will take the sacramento office to get out letters?
Has there been any movement at all on changing the 1 July 2006 purchase date?
I have been reading the feedback on this and everyone is correct, pressure on your Representative/ Congressman is the only way to change the system. Or, go to your local media and get it on the airwaves. Watch how fast things change then. Yes, we volunteered to serve our country, but if the public found out that more government attention was being given to wasteful programs (i.e. “Cash for Clunkers” -which ended up giving more money to FOREIGN car makers) than to helping a worthwhile program (Homeowners Assistance Program) move forward there would be an uproar. I think thousands of service members are underwater because of a PCS and down housing market. The vast majority didn’t overspend their means, just lost their value and are force to PCS.
I am screwed like most by the July 2006 date, I purchased in November 2006 in Florida. HAP has become a joke in many circles because it would be a great program if it helped ANYBODY. If the gov’t is not going to help us, then come out and say it. Fine, move on, we lose, foreclose, delcare bankrupcy, etc. but at least we know where we stand. Don’t establish a program to help, and then establish rules that help next to nobody. Bottom line, write and get your story out there into the public realm and if the gov’t still doesn’t listen, then “vote the bums out.”
Completely agree with everyone who says that we must push Congress to get this fixed. Here’s an easy way to do it. Click the link below for pre-written letters and a drop down menu for your Congressman / Senator’s addresses. You can personalize the letters as well. I hope this helps. While you are on the site, sign the petition that we will send along as well. For those of you who live in the NOVA / DC / MD area, pay them a visit!
http://www.moresam.net/Make_a_Difference.aspx
Joe Gladden, Manager Partner, VR SAM
I applied in Aug 09 and sold my house same month for about 16% loss. It appeared I was a shoe in. And then the official guidance says that your county as a whole has to have seen at least a a 10% drop from Jul 06 – date of HAP application. I got an email telling me I don’t qualify on that point, which is absurd. I have no idea how they are computing market drop, but in Jul 06 my house was assessed at 360-380K and at time of application it was 300-310K. So I sold based on HAP advice and then after the fact I get the “sorry” email. And now I am reading above that if you PCS’s before Feb 09 you are ineligible??
I live in CA but sold the house in MA. So which Congressman should I be visiting? What about the sponsors of the bill? I am sure the sponsors never intended for so many people to be excldued due to incompetent execution of the bill on the DoD’s part…
Also ment to say that there needs to be a more organized protest – Congressman tend to react when there is a permeating issue among their constituency. This blog is a great start, but we need something that better allows people to submit their grievance, organized by particular clauses in question. Of course with this effecting so many people across the country, I really think the better approach is to go right to the bill sponsor who will then act regardless of which congressional district the grievance comes from.
HAP benefits will be tax-free as of Friday when President Obama signs the extension of unemployment benefits and first-time home buyer credit. HAP benefit taxation issue is in Section 14 of H.R.3548.
Also learned from Sacramento that they’re processing surviving spouses and Wounded Warriors first, then in chronological order by PCS date.
Thank you so much for this blog! As with so many of you, we are in a desperate situation. Bought our house June of 2007, then got PCS orders (two years early). The market plummeted after we purchased our house. Will do all we can to spread the word and get people to submit requests to our congressional representatives. What should the main message be: The Expanded HBA program needs updating? Close the loopholes? It’s helping no one?? Please advise, and we’ll begin to tap our social networks to spread the word. We are devastated at the losses we are about to incur (and wouldn’t be incurring if we were still on the original schedule to move).
thank you!
All… we (your fellow military & spouses) are fighting to get the HAP changed! But we need your help… sign the below website and it will send letters to your congressmen, sentators & the President. If we would all stick together, we CAN and WILL get this biased criteria changed. The petition we established below states changes requested that would open the door for many of us active duty suffering from this housing crash. Please pass on to as many blogs and people you know!
http://www.petition2congress.com/2/3500/dod-homeowners-assistance-program-modification
Respectfully requesting your assistance in changing the DoD Homeowners
Assistance Program Military Members PCSing eligibility criteria;
specifically for the home purchase date to be removed and replaced with all
Active Duty military homeowners that are 10% or more upside down on their
mortgage. Currently the home purchase date eligibility criteria of prior to
1 Jul 2006 is unreasonable, as Military members are not real estate experts,
they are war-fighting experts defending you and this country. Additional
perimeters are already established such as the eligibility criteria of PCS
orders must be dated between 1 Feb 2006 and 30 Sep 2012. Simply removing
the home purchase date requirement and replacing it with “all Active Duty
military homeowners that are 10% or more upside down on their mortgage”
would make a significant difference to Active Duty Military members
financially and morally devastated by the housing crisis but would not
significantly affect the DoD Budget.”
Additionally, we have established a petition that will go to President
Obama, your Senators and your Congressman, so if you could also go to the
below website and sign this petition it would be greatly appreciated. If
you don’t have time to go to the above website, at least please go to the
below. But doing both would be most advantageous for all of us!
http://www.petition2congress.com/2/3500/dod-homeowners-assistance-program-mo
dification