Military Homeowners Assistance Program (HAP) Helps Some Military Members Avoid Foreclosure or Short Sale
The military HAP program was expanded "temporarily" last year to assist service members and DOD employees who are wounded, injured or become ill when deployed, surviving spouses of service members or DOD employees killed or died of wounds while deployed, service members and DOD employees assigned to BRAC 05 organizations, and service members required to permanently relocate during the home mortgage crisis." (http://hap.usace.army.mil/.) Over time, exactly how the program would work was a work in progress, and it remains so. We waited for more information on the Army HAP website, and it has been updated pretty regularly, expanding the understanding of how the program is applied. Having experience actually doing these transactions helps to smooth out the bumps of a process that takes four and more months, typically, to complete.
The HAP program was originally created to financially compensate military servicemembers and DOD employees who were relocated from military bases due to Base Realignment and Closure (BRAC), where the base closure caused the reduction in home prices. The military servicemember would have the HAP program pay a substantial portion of any amount that a private sale did not cover; that is, most of the amount between the purchase price that the servicemember paid, and the sale price he was getting while selling in a market that was down due to the base closure. The HAP program does not cover that amount in full; it is a case by case basis to determine how much HAP will cover. (See HAP FAQs.)
When would not using the HAP program make sense? This would include situations where the home could be rented out for enough that - monthly - the servicemember can comfortably make up the difference between rent and the mortgage (including Principal, Interest, Taxes and Insurance), pay less in federal taxes (consult your tax professional), and let the tenant pay most of the investment. Over time, once the loan was paid off, the home is an investment that pays the investor servicemember monthly in the form of rent received. This is one of the most powerful savings vehicles Uncle Sam provides to servicemembers - using BAH to buy a home for the years the servicemember is in it; the servicmember later can use the tenant's rent payments to pay most of the cost of paying off the loan once the servicemember is PCS'd to another duty station.
If the servicemember feels that that monthly payment - the amount the tenant doesn't pay monthly - is too burdensome, then he/she would consult the HAP website and also a Realtor in their area experienced with HAP sales. Why use someone experienced? Anyone who has bought or sold a home will agree, it can be a bumpy road, since each person is only one player in the transaction; we can't control people we don't employ - such as title, escrow, inspector, appraiser, loan underwriter, or folks administering government programs like HAP - but knowledge and experience can smooth out the ride.
The HAP program itself also encourages the servicemember or DOD employee to use a realtor in a private sale: "Using a realtor may increase your chances to find a buyer. The expanded HAP will pay all normal seller's closing costs, including a realtor fees." (See HAP FAQs.) If the home instead is purchased by the government, the government will not pay realtor fees, so you will want your listing contract to account for that. (HAP FAQs.)
With the temporary expansion of the HAP program to "service members required to permanently relocate during the mortgage crisis," the program suddenly can make sense (depending on the servicemember's personal situation) in our coverage areas of Murrieta, Temecula, Oceanside, etc., near Camp Pendleton as well as Twentynine Palms, Yucca Valley and Joshua Tree near the 29 Palms Marine Corps Air Ground Combat Center (MCAGGC). His background as a retired Marine attorney, REALTOR and Broker made Frank Delzompo a logical fit as a Realtor helping with HAP sales, and experience doing these sales now combines to help even more servicemembers through the process. His experience doing HAP sales rounds out the HAP website's list of frequently asked questions, when the transaction hits the inevitable bump(s) in the road.
The program has guidelines for HAP eligibility if the servicemember owns a home and is being PCS'd (permanent change of station order) and therefore required to permanently relocate during the home mortgage crisis. Among other things, the military servicemember had to have purchased signed a contract to purchase the home before 1 July 2006, and be receiving orders to leave on reassignment between 1 February 2006 and 30 September 2010.
For more information, please contact Frank@DelzompoHomes.com, 951-326-7330.
Information is general and is not guaranteed. Consult a professional about your specific situation. The military administers the HAP program and may make judgment calls or decisions that are not in the control of the real estate or other professional you choose. The HAP program is still evolving and may change without notice.