Military Families-Options if You Are Upside Down on Your Mortgage
By Cindy Jones on January 8th, 2010In the Northern Virginia real estate market where prices have declined military families with PCS orders face a difficult decision. Do you hold on to your home and rent hoping for prices to rebound in another 3-5 years or attempt a short sale and hope that your lender will consider PCS orders a “hardship?”
There are two other options that may be available for you to consider as weill. Military families stationed at Fort Belvoir, the Pentagon, Quantico and other Military District of Washington installations who purchased a home prior to July 1, 2006 may find that Homeowner Assistance Program (HAP) may offer some relief if you have upcoming PCS orders to move.
The HAP program is aimed towards helping:
Active Duty Military Personnel with PCS orders who are upside down on their mortgage
Wounded soldiers who must relocate due to medical conditions (wounded after 9/1/2001)
Surviving Spouses (death of military member after 9/1/2001)
If you live in Northern Virginia and you are anticipating PCS orders in 2010 and you qualify for HAP, now is the time to start gathering your documents and call the HAP Field Office for our area (located in Savannah) at 800-861-8144 for additional information.
Download information on how to apply for the HAP program.
If you have a VA Loan you may be eligible for a VA Compromise Sale. In our region of Northern Virginia the VA Regional Office which will provide you with the latest updates is the Roanoke office. The VA Compromise sale does have several factors that are important to remember:
• The property must be sold for fair market value.
• The closing costs must be reasonable and customary
• The compromise sale must be less costly for the Government than foreclosure
• There must be a financial hardship on the part of the seller
• On loans that originated on or before December 31, 1989, the seller must be willing to sign a promissory note
• There must be no second liens or other liens (unless the amount is insignificant).
• The seller must first obtain a sales contract in order to be considered for the program.
To protect the seller’s interest, the seller should make the sales contract contingent and/or subject to the approval of a VA compromise sale.
VA Compromise Sale Information Packet
There is an extensive list of VA approved list of Loss Mitigation Servicers available on the VA site. A VA Compromise sale does require that the VA approve the HUD-1 be reviewed and approved by the VA prior to settlement so making sure the buyers documents are in order at least 48 hours in advance is a must.
If you are stationed at Fort Belvoir, the Pentagon, Quantico or any of the Military District of Washington installations give me a call at 703-346-2213. I’ve closed HAP deals under the new guidelines and understand the process well.
Hello and thank goodness for your website! I tried to call the HAP today, no answer or not open message. Went to Bolling AFB Housing office, the assistant knew a little more info than I did, gave me a power point printout.
According to Zillow.com, the home I purchased in Triangle,VA (Prince Wlm county)Apr 2006 is now worth over $150K less today. I was told to be considered for HAP that it one’s home must be > 10% less AND the housing market in the city, county, some area must also be > 10% less now from when the home was purchased.
What is the formula?
Thank you for any help
Carl,
I have settled five HAP transactions so far and have two more under contract.
There is little doubt that your home meets criteria required by HAP for decrease in value. The real number will come from a CMA to show you the exact values in your neighborhood but so far between Fairfax County, Prince William County and Stafford there haven’t been any issues in regards to value.
If you need assistance please feel free to give me a call.
I will also drop you an email as well.
My husband and I have made an offer on a HAP house. It was accepted a month ago and we are being told it could take up to 6 months to complete the sale. The owner (pcs sale) wants to go government purchase. We are also on pcs orders. Do you have any ideas of time lines for this type of sale. St. Mary’s county Maryland.
Thank you.
Susan-I dropped you an email but to follow up with your comment. The process was longer before the program was fully approved. Since the program was approved and funded HAP recommends that contracts reflect a 60 day close. The internal process once all of the paperwork is received is to go through their internal appraisal review and then goes to the benefits department. Once in benefits the files are processed based on order out dates. My last closed sale we accepted an offer in mid-November, the owners had a PCS date of mid-December and the closing occured in late January. The real estate specialist handling the sellers file can let them know where they are in the que.
DOES THIS APPLY TO NC AS WELL? MY HUSBAND AND I HAVE TO MOVE TO FLORIDA AND CANNOT SALE OUR HOUSE BECAUSE IT HAS DROPPED IN VALUE AS MUCH AS OR MORE THAN 150K SINCE WE BOUGHT IT IN 2003. WE COULD NOT POSSIBLY EVEN RENT IT FOR THE MORTGAGE AND FEEL TRAPPED. WE HAVE EXCELLENT CREDIT AND REFINANCING IS NOT AN OPTION BECAUSE OUR LOAN TO VALUE EXCEEDS THE 80% THAT NFCU REQUIRES. WE CANNOT AFFORD TO SALE IT AND TAKE SUCH A BIG LOSS.
If you are an active duty military family it doesn’t matter where you live to qualify for HAP as long as your home has decreased at least 10% in value AND you meet the other guidelines. Check out the HAP website to make sure you meet the qualifications and if you do then by all means follow the application procedures.
Good luck.
I was told if you are purchasing a HAP home you can rent it out until the sale is final. What I don’t understand is sometimes everyone comes out on top except the seller. The realestate agent and the buyer of the house come on top with a loss to the seller.
Clevland-having the property rented is also good for the seller. I had four of my early HAP deals set up with pre-occupancy agreements which helped the sellers cover some of the expenses of carrying the cost of their home while already out of the area.
Not entireley true. I am stationed in California and over $200,000 upside down. I was turned down for HAP because the original cost of my property is greter than $729,000. I pay my mortgage evry month and I am now forced to short sell or foreclose.
Kim-the program does have upper value limits which is stated on the HAP website. I’ve had a few calls from families in our area and one of the first questions I ask is what was the original purchase price of your home? If they say a number over $729,000 then I let them know they aren’t eligible for the program and we need to explore other options.
Do I qualify for HAP? I purchased my home in July 1997 for $217,000, have a 1st Mortgage of 450,000 and a 2nd of 80,000 and its current assessed value is 467,00. I live in Woodbridge, VA (Prince William County)
Sarah,
The answer based on the information about your mortgage appears to be no. Here is why. HAP benefits cover the original loan on the property. Unless you can show that the additional funds you took out beyond the $217,000 were for improvements to your home then you would not qualify. HAP does not cover loans that were taken out when the values of properties skyrocketed and homeowners removed their equity for other purchases. There are other criteria if you are Active Duty Military or qualify under the HAP DNRP for civilians to consider but just based on the little information you provided I don’t think you would qualify. That answer might change with more information.
[...] military family in Northern Virginia is making a move and using Department of Defense HAP benefits to assist [...]
what other options are available to retired vets who are over the 729000 threshold?
Ted-HAP is only available for those who have a mandatory retirement between the dates outlined for HAP benefits. If you meet those requirements then you would need to apply for an exception directly with HAP to determine whether they would waive the top price limit currently in place.
Cindy –
My husband and I just found out we are going PCS to NE in Dec. I have read many websites and continue to get conflicting information. Also, I can not find a real estate familar with this HAP program. We purchased our home in March 2008. Now we must sell for a slight loss and pay about $20,000 out of our own pocket. With this information would you be able to tell me whether or not we qualify for the HAP program? Thank you in advance for any advice. Sincerely. Nancy
HAP benefits currently state that you must have bought your home or been under contract to purchase your home prior to July 1, 2006. Since you bought your home in 2008 you would not qualify for HAP under the current guidelines. You can talk to your lender directly to see if they would provide any options for you to sell as a short sale without being late on your payments. Some lender do understand the PCS orders are a hardship. Most of the HAP sellers I am assisting in Northern Virgina are upside down on their homes in 6 figure numbers.
Cindy – Thank you so much for your quick response and helpful advice. Even though it doesn’t take the sting of our financial loss away, seeing the 6 figure number losses in your area, we realize we good be much worse off.