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HAP Update
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Joe and Deb - VR SAMUser is Offline
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Sep 16, 2009 01:53 PM

    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   homesformilitary@vrsam.com

     

    copyright Joe Gladden, VR SAM 2009

    republished with the permission of military.com

     

     

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    original anon
    Posts:831


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    Sep 17, 2009 01:45 PM
    Joe,

    This is oustanding! I'm so glad you were publised and MAYBE this will catch someone's attention to DO something.

    It seems there are only a handful of those tied up in HAP that visit this forum, so this will further reach those effected who don't know about this site yet.

    Best wishes. Keep up the good fight!
    Joe and Deb - VR SAMUser is Offline
    VR SAM
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    Sep 18, 2009 03:24 AM

    Thanks.  In the very near future (ie. next week) we will post on this forum and other areas in the MORE SAM site a petition for Realtors who serve and support Military Families to the National Association of Realtors to urge them to support our effort by pushing Congress to engage this issue.   Thanks for you continued interest and please stay tuned. 

    Joe

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    cmmeter
    Posts:831


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    Sep 18, 2009 07:44 AM
    Thanks for the article.
    Why doesn't anyone see the need to move forward with this to help military families? Or at least write into the Loan Modification rules - to allow military families to modify loans to help them make payments on a house they had to leave?
    You would think this is a no- brainer. When I spoke to the many people about loan modification and help for the military I was told by one person "the military isn't the only one that needs help".....
    whatever....
    Thanks again
    karen davis
    Posts:831


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    Sep 18, 2009 10:52 AM

    Latest news from ways and means committee. Could this be the good news we are waiting for? Time will tell.
    Karen
    From Airforcetimes.com

    Bill to help homeowners moves forward

    By Rick Maze - Staff writer
    Posted : Thursday Sep 17, 2009 13:09:53 EDT

    The House Ways and Means Committee unveiled a bipartisan military homeownership tax bill Thursday with provisions aimed at helping people buy or sell a home in a down market.

    Committee aides said the bill, a collection of several tax-related initiatives for service members and their families, is on a fast track for consideration by the House of Representatives. It could pass the House in two weeks, aides said.

    Among the key provisions of the Servicemembers Home Ownership Act of 2009:

    * Homeowners Assistance Program payments from the Defense Department, for certain service members forced to sell a home at depressed prices, would be exempt from taxes. The tax status of the payments are one major reason why the Defense Department has not yet made any payments of a benefit that is expected to cover about 10,000 people who bought a home before July 1, 2006, and who are either wounded service members or who are permanently reassigned to a new duty station. About 4,000 people have applied for the help, even though the Pentagon has yet to publish rules for how payments will be made.

    * Service members and some federal workers who received an $8,000 first-time homebuyer tax credit for the purchase of a home before Dec. 1, 2009, would not have to repay the credit if they sell the home after less than three years or stop using it as their primary residence. Military personnel, Foreign Service officers and members of the intelligence community who are forced to sell their homes because of government orders would be exempt from repayment.

    * The $8,000 tax credit would be extended beyond Dec. 1 for service members, Foreign Service officers and members of the intelligence community who have been deployed outside the U.S. for 90 days or longer between Jan. 1 of this year and the Dec. 1, 2009, expiration date. The extension is recognition that they may have been unable to purchase a home because of government service. Income limits still would apply, phasing out the credit for single taxpayers with adjusted gross income of $75,000 or more and couples filing joint returns with adjusted gross income of $150,000 or more.

    Ways and Means Committee chairman Rep. Charles Rangel, D-N.Y., chief sponsor of the bill, said in a statement that the measure is intended to ensure that service members are “able to take full advantage of the programs we enact.”

    “This bill will improve how certain provisions under the Recovery Act apply to America’s service members, and I hope it will see swift passage in the House and Senate so it can get to the president’s desk as soon as possible,” Rangel said.


    karen davis
    Posts:831


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    Sep 18, 2009 11:13 AM
    Thursday, September 17, 2009
    Rangel Introduces Bipartisan Bill to Help Service Members Take Full Advantage of Homebuyer Incentive



    WASHINGTON, D.C. - Ways and Means Committee Chairman Charles B. Rangel (D-NY), with 28 additional original cosponsors, today introduced H.R. 3590, the Service Members Home Ownership Tax Act of 2009, which would make certain changes to the tax code with respect to provisions included in the Recovery Act to improve how those provisions apply to service members (i.e., members of the uniformed services, members of the Foreign Service, and intelligence employees).



    “America’s service members devote their lives to our national security,” said Chairman Charles B. Rangel (D-NY). “Congress should do everything we can to ensure that service members are able to take full advantage of the programs we enact. This bill will improve how certain provisions under the Recovery Act apply to America’s service members and I hope it will see swift passage in the House and Senate so it can get to the President’s desk as soon as possible.”

    Joe and Deb - VR SAMUser is Offline
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    Sep 19, 2009 08:20 AM

    Karen, this is indeed as very positive and encouraging  update 

    I am a big believer in momentum.  If you have been waiting on the sidelines, wait no more.  Call your Congressmen / Senators and tell them to get  behind this. 

    But this is really just a start.  It is critical that they also drop the arbitrary July 1 2006 date that eliminates so many people.  And we should still be very aware that the percentages that apply can leave Military Families holding the bag for subtantial losses even if they qualify.

    Finally, we should use this as a spring board to get a permanent fix in place similar to that enjoyed by other federal employees. 

    Don't wait!  It's your money and your family!  Get involved.  You can use the link found on the moresam home page (upper left) to write your letter.   Don't hesitate to pick up the phone and call them...THEY WORK FOR YOU! 

    Joe

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    original anon
    Posts:831


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    Sep 21, 2009 05:05 PM
    I am conservatively optimistic with this great news. Lets hope they see the need to rush this through. I also wanted to mention that I'm not able to get on HAP's website, as is usually the case when they are updating something. Sometimes the site is down for days or weeks, so it doesn't mean anything will happen soon, but fingers crossed they have all the wording in place so they can just hit "enter" once this tax stuff is settled and get it on the website!!!!

    Thanks again for the info. This site is invaluable!
    original anon
    Posts:831


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    Sep 21, 2009 05:05 PM
    I am conservatively optimistic with this great news. Lets hope they see the need to rush this through. I also wanted to mention that I'm not able to get on HAP's website, as is usually the case when they are updating something. Sometimes the site is down for days or weeks, so it doesn't mean anything will happen soon, but fingers crossed they have all the wording in place so they can just hit "enter" once this tax stuff is settled and get it on the website!!!!

    Thanks again for the info. This site is invaluable!
    weneedpeace
    Posts:831


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    Sep 24, 2009 07:57 AM

    There is room for optimism in the recent updates.

    The $8,000 credit exemption is much needed.. we have service member friends who purchased this year and did not even consider what would happen if they were transferred out in a year or two.. That would have been a HUGE shock to them if they learned they would have to repay.

    As well, extending the credit to service members that have been outside the CONUS is wonderful!

    I do have a question regarding the %'s.  What are those of us to do if our homes have depreciated substantially.  Example:  Our payoff is around $286K.  According to 3 Realtors who have reviewed comps, the realistic value of the home is $210K now.   Under the current language, can a service member even use this program or would they have to come up with the difference. 

    Also, those of us that have tenants in the property.. how would we even begin to gauge using this program.  Example:  Our tenant has 15 months left on their lease.  If we applied for this program, while it's great if it 'doesn't matter' if there's a tenant in the property or not.  But, if we were to apply for HAP and then they start moving along working through applications, the timing is off.  

    This completely confuses my husband and I as to whether we should apply.  As mentioned in previous posts, we can not list short sale.

    But, if the home goes into foreclosure, should we apply now or wait until it actually goes into foreclosure to recoup costs?  Are details regarding this out yet?

    karen davis
    Posts:831


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    Sep 24, 2009 03:16 PM
    Progress...
    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- so 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!
    Karen Davis
    Posts:831


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    Sep 24, 2009 04:56 PM
    As families currently eligible for the Department of Defense HAP program await updated guidelines to be published, additional funding is being proposed in the US Senate by Virginia Senator Jim Webb for Fiscal Year 2010.
    Senate bill (S 1309) proposes an additional $350 million dollars to enhance the funding provided by the American Recovery and Reinvestment Act passed last fall.
    Joe and Deb - VR SAMUser is Offline
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    Sep 25, 2009 06:38 AM

    In response to your first question, this is essentially what the HAP was designed for. It is my understanding (and happy to have any corrections) that if you sold the house yourself (assumes fully qualified for the HAP), the government would reimburse 95% of the difference between the appraised value and what you sell the home for.   

    Don't take my math to the bank as it hasn't been fully implemented and the rules are morphing way too fast.    

    I won't even speculate on the circumstance in which the government buys the property from you as it seems to be a moving target,.  But maybe someone else has better insight on this.   

    Regarding homes that are currently rented out, that is going to be a stickier issue for the implementers to figure out.   Each state is going to have their own landlord / rental laws and it is always problematic listing a home that is a rental.   Your renter has to cooperate with your listing / showing the house, AND the settlement date must be coincident with the end of the lease, unless they agree to move out.   You would most certainly need to discuss with the ACE and perhaps an attorney when it gets closer. 

    Probably not what you wanted to hear, but my guess is that as this program evolves, Congress will have to address such issues because you are certainly not alone in this.  

    Joe

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    Jessica
    Posts:831


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    Sep 29, 2009 08:59 AM

    Has there been any progress made regarding the 1 July 2006 cut-off? My husband is active duty Army, and we PCS'd to the DC/Maryland area in July 2006. We purchased our home in August 2006 since on-post housing was unavailable for 18 months+ since the private contractor on Fort Meade opens their housing to DoD civilians and retirees. We are currently underwater $70K(+) on our mortgage and will likely receive PCS orders in the next 6 months to a year. Based on my understanding of HAP, we are currently ineligable for this program based on the cut-off date. There are several other military families that live here with us, that are in the same situation and do not meet the cut-off date. If anyone can give us any information or guidance on what our options are- it would be greatly appreciated.

    Joe and Deb - VR SAMUser is Offline
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    Sep 30, 2009 05:11 AM

    Jessica,

    To the best of my knowledge there is no move afoot in Congress to move that Jul 1, 06 date. If anyone else has updated info, please chime in.

    In the absence of a move of the date, which we strongly support, your options when PCSing are pretty much limited to:

    1.  Holding the house and renting.  If you decide to do this, recommend perusing forum on this site:  TAG Property Management for excellent info on renting your home.   You can also advertise your home for rent on this site (MORE SAM) under the "free advertisements" tab on the tool bar.  

    2.  Selling the home and covering the deficit.  I know that is one that doesn't sound too good and fully understand how that feels!   The alternative is attempting a short sale and / or loan modification.  In this case, I strongly encourage you peruse the forum on this site, Dave Bryan, Helping Hand Foundation.  Dave is a strong military family supporter,  expert on both and is more than happy to do free consults on the pros / cons / probability of success on these options.  We have had clients use hime with excellent success!

    3.  Since you are in the NOVA area, I most strongly encourage you to make an appointment to see your home state Congressmen and Senators!   Have your friends who are in the same situation to write letters and march right in and tell them this is totally unsatisfactory and that the HAP doesn't meet your needs and the needs of thousands more.  Encourage your local NOVA friends to do the same with their Congressmen / Senators.  This is the only way that it will get fixed.  

    4.  Since we are also in NOVA, we are happy to discuss your situation, counsel / advise to the extent necessary.  We can provide comparative market analysis and thoughts on the market.  If that would help, just call me at 703 754-3036. 

    I wish we had better info, but with everyone's insistence, we can get Congress to get us there!   Hang in there.

    Joe

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    weneedpeace
    Posts:831


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    Sep 30, 2009 09:41 AM
    Joe,

    Your post regarding tenants in the property, mimics what I've been told by Virginia real estate attornies (landlord tenant specifically). Essentially, my option is a successful loan modification or foreclosure. Tenant's lease term does not end until Spring 2011. Consultations with several Realtors and my property manager's broker both yielded the same response. With the concentration of foreclosure listings in the area to attract an investor, it's a very small % of opportunity in selling this home short sale. Buyers seeking a primary residence would not be interested in purchasing a home by short sale that they can't even move into for well over a year (and at a loss monthly, as they'd be locked into my tenant's rent rate and their mortgage would *likely be higher).. and finally, we've been advised to not go any route of voluntarily disposing of the property, because of Virginia's landlord tenant laws being more protective of the tenant's interests. I'm glad that our tenant's have protections. At the same time, it does place us in a position of again - loan mod or foreclosure.

    This loan modification process is very complex, and we've not gotten anywhere as of yet.
    Our delegate sent a letter of concern to Wells Fargo. It has been CC: to Congressman Nye, Senator Webb, and the Commissioner of Virginia's Dept. of Veteran's Services.

    Thusfar, all I've received from Wells Fargo is the runaround. Documents are being lost, and I've had to contact the Presidential offices to find out what is going on. Because they'd sat on my package, the docs are also now outdated. I now have to fax (again) everything out with updated dates and signatures. This is AFTER having my rep at the VA contact Wells Fargo on my behalf to get an update on the status of our docs. The VA rep and I both called the same phone number within 45 minutes of one another, spoke with two different Loss Mitigation reps and were told TWO different things...

    I'm posting also on Loansafe.org now, as well as this site (same username), if anyone is on that site. I determined that our stories need to be on the internet, and it's at the point where I'm so far into the process, I'm delaying notifiying my tenants until we have an answer on the modification. But, it seems to hopeless that within the next 30 days, I'm going to have to make a decision on whether to let this go into foreclosure or keep fighting for a modification.

    I have great support from my broker and her property management team, along with several other contacts.

    FYI - my rep from the VA. I've called her twice, and she's answered the phone. In addition, she followed through same day with her inquiry to Wells Fargo and called me back promptly with her findings. She was able to get the first name of my negotiator but they would not disclose his last name or phone number to her. She did determine that they have not sent our file to the foreclosure dept (on that thought, I have also not received ANY collections calls since we officially went into default on the 12th.. package was acknowledged by Wells Fargo on the 19th)
    wopick
    Posts:831


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    Oct 11, 2009 08:55 AM

    This is from the HAP website.  We fall under this category because we closed on the house on 5 July 2006.  This is on the FAQ portion.

    [script removed]

     

    A. If you are a Military PCS eligible applicant and were under contract to purchase prior to 1 July 2006 and closed after that date, you would qualify. For applicants eligible as Wounded, Injured or Ill and Surviving Spouses the requirement to purchase the primary residence prior to July 1, 2006 does not apply.

     

    Joe and Deb - VR SAMUser is Offline
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    Oct 13, 2009 06:09 AM

    Thanks so much for sending this.  This would open it up a number of folks who otherwise would have missed it by a month or two.  Most settlements take place between 30-60 days after the contract is ratified,   

    If you think you now fall into this category, I strongly encourage you to find that contract file, verify the date ratified, and make sure you keep it in a handy, safe place.  Can't say what they will use to verify the contract date, but doubt that it is documented anywhere else other than on the cotract.   If you can't find it, contact your Realtor, their broker, and / or the settlement company.  They are likely going to have them on file in their office or in archive.  

    Joe Gladden

    Joe and Deb Gladden
    703 754-3036
    Fax: 703 848-3690
    homesformilitary@vrsam.com
    http://www.vrsam.com
    Specializing in Military, Defense Contractors, Fed Employees Relocation.
    Ask us About Fawn Lake - Virginia's Best Kept Secret!
    HAPpy
    Posts:831


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    Oct 13, 2009 10:17 AM
    Has anyone actually received any money from the HAP program yet?
    Trapetes
    Posts:831


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    Nov 14, 2009 02:23 PM
    Bad news on the HAP front: the applicable percentage is applied to your home's PFMV, then the selling price is subtracted, the difference is your benefit. I think most of us were under the impression the benefit was the applicable percentage applied to the DIFFERENCE between your home's PFMV and its selling price. Nope.
    In my case, the difference between what I believed to be the calculation and what I found out today it actually is = $48,591 LOSS for us. Supposedly we'll have our HAP funds for our sale's closing on Friday, November 20.
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