Thanks Joe and Karen for connecting me with this forum.  I am so excited that my first post is about some real progress!

Department of Defense Expanded Homeowner's Assistance Program Update- The Interim Draft Rule for Expanded HAP was approved for publishing yesterday, September 24th!  Presuming all services will come out with a message as soon as Interum Rule publishes.
 
Here's the process:
1) Interim Rule should publish on the Federal Register some time next week as DOD-2009-os-0090.  You can go to the Federal Register site to watch for it to post.  Then check http://hap.usace.army.mil/homepage.html to confirm via Army site.
2) There will likely be a 60 day comment period on the rules.
3) Final Rule will publish after that.
 
What does this mean to Service Members who have applied?
Good news- PROGRESS! Army Corps will begin to process applications as soon as rule publishes.  Wounded Warrior and Surviving Spouse claims will process first.  According to source new rule states PCS applications will process in chronological order by report date as packages are complete.  Translation- if your package is not complete you will be skipped till it is, even though you have already transferred.   The benefit to having applied before final rules is that your application should have already been reviewed by HAP reps and you have been contacted for missing paperwork.  If you haven't already, get Army Corps what they need asap! 
 
Bad news-  Federal and State taxes will still be withheld from any benefit payment processed prior to Legislators passing H.R. 3590, The Servicemembers Home Ownership Act of 2009.  Hopefully this bill will be fast tracked.  So, if you process early, you may have your own "recovery" effort on the taxes to rectify once the bill passes.
 
Pass it on to those who have been waiting for news!
 

Thanks for the update...that's the first good news I've heard in 6 months!

Great news, but long overdue. Thanks so much for the update.

Just received this new information:

Applicants,

It is my pleasure to announce to you that approved procedures for implementation of the HAP program have been received. In an effort to expedite determination of eligibility for each of our applicants, our main focus will be to concentrate upon a thorough review of the application and its' pertinent documentation. To assist us in expediting a determination of eligibility, we, respectfully, request that you review the updated information posted on the website (http://hap.usace.army.mil); and, for a short period of time, limit your telephone calls to our office. Once your application and documentation has been thoroughly reviewed, you will receive written notification as to the determination of your eligibility.

Please read the below information regarding your tax liabilities:
Section 1001 of the American Recovery and Reinvestment Tax Act of 2009 (ARRA) expanded the categories of eligible beneficiaries of the Homeowner's Assistance Program (42 U.S.C. § 3374) to include wounded, injured and ill, surviving spouses, and military members required to relocate during the mortgage foreclosure and credit crisis, and personnel impacted by the BRAC 05 announcement. Because section 132 of the Internal Revenue Code was not amended at that time, these formerly marginally taxable payments became very taxable. The requirement to withhold taxes on these payments prevents this program from successfully assisting needy individuals and those whom this program specifically intended to help. The House Ways and Means Committee introduced legislation to revise the Internal Revenue Code to make ARRA expanded HAP payments nontaxable. Just when this bill will be signed into law is unknown. Unless or until this bill is signed into law, current tax law requires USACE to withhold Federal income tax from HAP benefit and reimbursement payments amounts above applicant homes' current fair market value prior to disbursing payments to applicants or lending institutions.
Districts must, early in the application process, ensure applicants are aware of this tax liability and the Congress' intention to change it.
Additionally, applicants must be advised that state and local taxes may be due on HAP benefits as well as the Federal taxes withheld.

We, at USACE, strongly recommend that you consult with a financial and/or tax advisor so that you will fully understand your tax liability prior to receiving HAP benefits. If you need this assistance, you can contact the Military OneSource at 800-342-9647, and representatives will be able to refer you to a tax/financial advisor in your local area. Again, it is our pleasure to finally be able to provide this program to you.

If you listed major improvements in your application, you must provide receipts for these items if you would like them to be considered. Current guidance is that the Prior Fair Market Value is the purchase price, but it is anticipated that there may be an adjustment for improvements in the final guidance. Improvements and receipts must be in accordance with the guidelines established in IRS publications 552 & 527 (http://www.irs.gov/).
An appraiser will review any provided improvement receipts to determine what additional value will be credited.

If you are unable to provide receipts in accordance with IRS publications 552 & 527, and would like for us to proceed without providing additional receipts for these improvements (which would mean not receiving additional credit for these improvements), please send us an email requesting that we continue to process your application without receipts.

We will be contacting you regarding your eligibility in the near future.

Respectfully,

Homeowners Assistance Program
Savannah District