Military Families-Options if You Are Upside Down on Your Mortgage

In 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.

57 thoughts on “Military Families-Options if You Are Upside Down on Your Mortgage

  1. I just learned of this program, and not sure I qualify. I purchased a house in sep 2005 for 260k, then PCS’ed in 2008. Had to short sale for 180k in March 2009. I’m now out of the military and receiving over 30% disability from the VA.
    Under which program would it be better to apply through, if I qualify, and exactly would I be receiving?
    My family and I have to live with relatives due to not being able to purchase any property now due to the bad credit.
    Thank you so much for help

  2. If you did not have to pay anything, such as a promissory note or cash when your short sale was approved, then you won’t have any benefits due. However I would encourage you to contact the regional HAP office where your property was located to discuss your specific situation.

  3. Marcos-unless you had to pay money to your lender when you completed your short sale HAP will not be of any assistance to you at this point. The program doesn’t pay you the difference between your purchase price and the short sale price. It covers that amount with your lender. Once a short sale is approved the lender has written off the differences and there is no further money due from you.

    If you had to pay cash out of your pocket or sign a promissory note then HAP may help cover a percentage of those out of pocket expenses.

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