The “HAP less” HAP
(Homeowner’s Assistance Program)
By Joe Gladden, Realtor®, (Captain, USN, Ret.)
Managing Partner, Veteran Realty Serving America’s Military, Inc. (VR SAM®)
With Congress’ undivided attention on Health Care Reform, many of the “Housing Assistance Programs” have lost the momentum and oversight necessary to remove the tremendous bureaucratic obstacles and make them successful. At best folks who have been through the loan modification process will tell you that it is a long, miserable process. More often than not, loan mods are nothing more than an exercise in futility that is pre-requisite to beginning the short sale process, yet another complex, lengthy, and stressful process.
Nowhere is this truer than in the Military Homeowner’s Assistance Program (HAP) which has been an utter failure to date. You must be thinking, “man, this guy is really a pessimist.” Actually, I was most encouraged when Congress finally acknowledged that Military Families were hit hardest, and most unfairly, by the “housing crisis” by including it in the stimulus package. Many Military Families held out hope that the HAP would be the answer to their dilemma. But now six months after the Military HAP was thrown into the February Stimulus as a last minute add on, our sources tell us that not one dime of the $550M appropriation has gone to a single Military Family. And now many Military Families are running out of time and hope. Many now see the short sale, with the implication for credit, clearances and careers, as their only hope for avoiding a complete financial apocalypse.
The poorly written Congressional language has undoubtedly been problematic for the Army Corps of Engineers and DOD to interpret and implement (my interpretation). It was essentially a “cut and paste” from the original HAP, that was established in the 1960’s to assist Military Families and DOD federal employees impacted with a base closure (BRAC). Below are some of the typical questions frequently on our forum. They highlight the confusion on the critical elements of the policy. Likewise our responses to these questions are an assimilation of information from forum participants, Military Families, and we thank them for their assistance in sharing their information. The forum link is at the end of this article.
<!--[if !supportLists]-->1. <!--[endif]--> Will I be reimbursed at 95%, 90%, or 75% of the appraised or market value)? The Congressional language is very confusing on this issue.
<!--[if !supportLists]-->2. <!--[endif]-->Who will determine the appraised or market value, and on what date will it be based?
<!--[if !supportLists]-->3. <!--[endif]-->How long does the process take?
<!--[if !supportLists]-->4. <!--[endif]-->We couldn’t wait for the HAP due to PCS orders and rented our house out. Will the home still qualify as our primary residence?
<!--[if !supportLists]-->5. <!--[endif]-->This was an actual question that came to us about one month after the stimulus bill was passed. “We bought our home on July 1st, 2006. Are we eligible for the HAP?” The very unfortunate answer, per our interpretation of the Congressional language, is “No, you missed the window by hours.” The July 1, 2006 date applies to folks who are not otherwise eligible for the “wounded warriors” section of the program.
<!--[if !supportLists]-->6. <!--[endif]-->“Will I be taxed on any amount forgiven?” This is the question that is holding up implementation of the program. While we are not CPAs, we understand that as presently written, yes, you would be taxed on these amounts but Congress is apparently trying to rectify this.
Understandably, the Army Corps of Engineers is reluctant to give definitive answers until DOD guidance is completed.
It is important to note that depending on several factors such as the original price of the home, the appraised or market value determination, and which percentage (95%, 90% or 75%) applies, the losses to the Military Family could still be very significant. Also, we believe that homes that have been rented out may still qualify as “primary residence,” and thus for the HAP. But this has not been definitively clarified.
Also, folks who participate on our forum tell us that the Army Corps of Engineers is accepting applications but then are told that they could wait as long as nine months after the implementation issues are resolved before their applications would be considered due to the building backlog! While this is anecdotal, we have had numerous comments to this effect and this alone renders the program ineffective for families who need to dispose of their house and PCS NOW! In some cases, they must put a renter in the home and now have a lease obligation that further complicates the timing of any sale of the home, HAP or HAPless. (Ok, bad pun!).
Well, am I the only one who sees this as an ineffective program? We conducted several polls over four months with the following results:
94% of the respondents believed that “The HAP was an inadequate fix for Military Families hit hard in the housing market.”
98% of the respondents believe that “Military Families should receive a full tax credit for losses incurred due to losses on their homes incident to PCS moves.”
And 99% of respondents believe that “Military Families should enjoy parity in benefits (paid settlement costs and protection from catastrophic losses on home sales) as some other federal employees.”
In a nutshell, we contend that like other federal agencies and corporations, expenses and losses associated with PCS moves are indeed an expense of employment and should be paid, or at least mitigated in some manner (tax credits), by the employer. We believe it is a reasonable expectation by those (and their families) who defend our country!
Finally, we know that thousands of Military Families are struggling with many of the issues addressed in this article. We offer to them the opportunity to tell their stories, to see that they are not alone in this mess, and the chance to share what they have learned to the benefit their fellow service members on http://www.moresam.net/Forum.aspx.
Thank you for serving!
www.moresam.net http://www.vrsam.com/">www.vrsam.com firstname.lastname@example.org
copyright Joe Gladden, VR SAM 2009
republished with the permission of military.com