More on the Military Foreclosure Epidemic
How Did We Get Here?

By Captain Joe Gladden, USN (retired), Realtor
Veteran Realty Serving America’s Military, Inc. VR SAM®

We congratulate and thank Military.com for illuminating this critical issue in their recent lead article. For two years we have been working hard to address this issue and proposing solutions. We believe that the recent media attention will be key to getting Congressional and DOD attention. Oddly enough, many of the Military friendly non-profit organizations are very slow to come on board with the issue. Here are some of the recent excuses I have heard from well known organizations with a great history of support for Military Families:
1. “We can only go forward with so many issues and must prioritize them. This one just isn’t important enough…yet!”
2. “We don’t want to take the lead. We’ll wait until there is more of a ground swell of activity or Congress gets involved.”
3. And here’s my personal favorite (not!). “We can’t just bail out everyone who makes a bad investment decision. They chose to take a bad loan!”
We won’t embarrass these organizations by mentioning them by name, but it is very important to recount just how we got here and clarify a few facts.
Let’s start by a refresher on Maslow’s Hierarchy of need. Shelter and security are on the first tier! It is of course obvious but by the mere existence of base housing, DOD acknowledges some responsibility to provide housing for our Military Families. Of course, there isn’t nearly enough (check the wait lists) and much of it is acknowledged to be inadequate.
Two generations ago, homes weren’t really considered an “investment.” They were shelters for our families…period! It wasn’t until the ‘70’s that home prices began the appreciation that has led them to become most families’ “largest investment.” So, homes are still first and foremost an absolute necessity…and even if they are our biggest investments, haven’t our Military Families earned the opportunity to share in that American Dream? Perhaps adequate housing is more important than other worthy agenda’s supported by Congress and our non-profits.
Secondly, most of the Military Families who are facing foreclosure did not make bad choices. There seems to be an assumption that anyone who chose an adjustable rate mortgage made a huge mistake and should suffer the consequences. The fact is that most ARMs are not subprime. Furthermore, in most cases they were chosen because the VA loan simply wasn’t competitive and hasn’t been for 25 years in the more expensive areas of the country, where coincidently many Military installations are located. ARMs were essentially “invented” by the mortgage industry in the late ‘70’s and early ‘80’s when 30 year fixed rates were above 15% and have worked very well for thousands of families.
In comparison to ARMs, VA loans had higher interest rates, thus higher monthly payments. They had significantly higher settlement costs due to the VA funding fees (2-3% of the loan amount), and in high cost areas, they simply weren’t an option as the maximum loan amounts were considerably lower than the cost of the average home. So the 3/1 or 5/1 ARM made tons of sense for someone with 3 year orders who would be waiting 1 year or more for base housing.
So how did we get here? Well, it wasn’t through thousands of “bad decisions.” Military Families need homes. Base housing and rentals are not always available and / or may not meet families’ need in terms of schools and other considerations. Military Families believe they have earned the right to share in the American Dream. The recent Perfect Storm of a historic housing market decline, adjusting ARMS, and a thing called PCS “orders” have resulted in a major crisis for those on the front lines defending our country…and their families. This issue must be addressed, and soon. We desperately need highly educated, high quality personnel serving in our high tech, all “volunteer force.’ Please read the following excerpt from a family who couldn’t sell or rent their home prior to the PCS that came to us yesterday.

“Thanks, a little update on us…we have decided to move into a camper which will significantly lessen any rental obligation…this will allow us to continue making timely payments on the mortgage until we are able to sell. While this is not necessarily the desired solution it is nevertheless a solution that keeps us out of foreclosure.
I will continue to support your effort in any way I can, there are many families out there in worse shape than us. It is a bit disheartening to read some of the comments left on the story..it seems that some people believe that those of us in this situation are just asking for a free hand out.
We are willing to accept living in a camper and make any other additional sacrifice because at the end of the day that is accepting responsibility for our role. We have to ask ourselves if they are going to damage our credit either way why we should we worry about paying it back…you know what the answer is…responsibility… even though my hubby will likely lose his security clearance and once the short sale goes on our credit we will have a hard time renting, we will still pay the difference back…”
Here’s a Military Family…living in a camper trying to make their payments! ‘Nuff said!
We value your feedback and thoughts.
VR SAM® email: homesformilitary@vrsam.com
VR SAM® Military Community Forum http://vrsam.conforums.com/
Written for, and republished with the permission of military.com. All rights reserved by VR SAM®.
Copyright 2008

Thank you for not giving up the fight for the many military familes in desperate situations. What will it take to get the attention of our elected officials to realize that not only is this unacceptable that those fighting for our very freedom, it is a national security issue. When our military is weakened by hardships our country is weakened as a country. My husband served over 25 years in the USCG reserves. On 9/11 he was activated within hours to a duty station several hours from our home. During this time he was on contract and later accepted a direct commission. After five years his employer (one of the largest in the country) terminated his employment, we were forced to accept a full time committment into the military. We were relocated to the DC area during the height of the housing boom. Knowing that this was a temporary assignment we rented until one day we received a letter in the mail that the owners wanted to capitalize on the rising home prices and we had 30 days to vacate. We had our name on the waiting list at Frt. Belvoir however, was told they were not accepting Officers. Quantico told us they would not accept any outside branches of the military. The USCG being a smaller unit has very limited housing opportunities, none in the metro area. Eventually, we ending up buying a home in hopes of selling in two years. My husband has since PCS'd to a lower BAH area and has been commuting for three hours each way after all night,twelve hour shifts. His BAH has dropped $700 a month and we just rented our house for $500 a month less than our interest only ARM. Afraid of jeapordizing his top secret clearance, we are thinking of renting a trailer and living in it. Desperate. Again, I ask "what is it going to take to get their attention"? Do we need to sit on the steps of Capital Hill until we are reconized? It is shameful and unacceptable that they are willing to "bail out" sub prime loans or those withour social security numbers and not those that serve for the very freedom to own a home. Equally puzzling is why are they willing to "buy out" other governmental workers and the military who is forced to move every three years. All I know is it is a "desperate" situation for many of us. I am ready to quit my job and dedicate all of my energy to this very worth while cause.