HAP not Helping Military Homeowners

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 to make them helpful. At best, folks who have been through the loan modification process will tell you that it’s a long, miserable process. More often than not, loan mods are nothing more than an exercise in futility needed to begin the short-sale process — another complex, lengthy, and stressful process. 

This is particularly true for the Military Homeowner’s Assistance Program (HAP), which has been an utter failure to date. 

You must think, “man, this guy is really a pessimist.” Actually, I was 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 HAP would be the answer to their dilemma. 

But six months after HAP was thrown into the February stimulus package, our sources tell us that not one dime of the $550 million appropriation has gone to a single military family. And now many families are running out of time and hope. Many now see the short sale as their only hope for avoiding a complete financial apocalypse. 

In my opinion, the poorly written Congressional language has been problematic for the Army Corps of Engineers and the Department of Defense to interpret and implement. It was essentially a “cut and paste” from the original program that was established in the 1960s to assist military families and DOD federal employees impacted by base closures (BRAC). 

Below are some of the frequently asked questions about HAP on our VRSam’s online forum. They highlight the confusion on the critical elements of the policy. We were able to compile responses to these questions from forum participants, military families, and we thank them for their assistance in sharing their information. 

1. Will I be reimbursed at 95 percent, 90 percent, or 75 percent of the appraised or market value? 
2. Who will determine the appraised or market value, and on what date will it be based? 
3. How long does the process take? 
4. 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? 

This question came to us about one month after the stimulus bill was passed: “We bought our home on July 1, 2006. Are we eligible for the HAP?” 

Unfortunately, the answer is no. According to our understanding of the Congressional language, this family missed the window by hours. The July 1, 2006 date applies to folks who aren’t eligible for the “wounded warriors” section of the program. 

Additionally, our forum participants wanted to know, “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’s 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 percent, 90 percent or 75 percent) applies, the losses to military families 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.

In an effort to gauge the success and effectiveness of HAP, we conducted several polls over four months with the following results: 

• 94 percent of the respondents believed that “The HAP was an inadequate fix for Military families hit hard in the housing market.” 
• 98 percent of the respondents believe that “Military families should receive a full tax credit for losses incurred due to losses on their homes to PCS moves.” 
• 99 percent 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.”

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 , by the employer. We believe it’s a reasonable expectation by those (and their families) who defend our country.

Finally, we know thousands of military families struggle with many of the issues addressed in this article. We offer to them the opportunity to tell their stories, to see that they’re not alone in this mess, and the chance to share what they learned to the benefit their fellow servicemembers on VR Sam's Forum.

Thank you for serving!