In January five of my military client’s closed on the sale of their homes using the Department of Defense (D0D)-Homeowners Assistance Program (HAP). Yes if it is a military related program it is going to be full of acronyms.
For many military families in the Northern Virginia area there is no doubt that the stress of a PCS move alone is high. Add the possibility of facing a short sale and the stress can go off the scale. Fortunately as part of the Economic Stimulus Relief Act military families who were under contract to purchase a home prior to July 1, 2006, have PCS orders prior to September 1, 2010 and have lost at least 10% of the market value of their home can apply for HAP benefits.
The program offers military sellers a chance to move without having to go through the painful process of a short sale and the possibility of ruining their credit. This is huge for anyone with a security clearance and with military families where moving every three or four years means credit checks for new housing (either buying or renting) ruined credit could be devastating.
For more program information you can go to the USACE HAP website.
If you are a military family living in Northern Virginia and meet the qualification for the USACE HAP program give me a call at 703-346-2213. I’ve settled HAP transactions and have more under contract. I understand the process, the lingo and know what it takes to get your Northern Virginia home SOLD.
Thank you very much for your quick reply regarding my question posted last May 15th. We have decided to stick with the first agent and she has agreed to sell our house using the HAP. I feel confident now about this decision.
My second question is — should we continue paying our bimonthly mortgage on time now that we are using HAP? The reason I ask this question is because someone suggested we should stop paying our house since we are using short sale. His reasoning is that we are going to lose money and ruin our credit record anyway so there’s no sense in paying on time while the house is in the process of being sold or before the bank buys our house.
Thank you again for your advice.
Cindy,
Thank you again for this wonderful website! What do your sellers normally put in their contract regarding HAP?
Patrice
Hi Cindy,
We are currently selling our house using the HAP program. My realtor has never done this before and it is really hard to get in contact with anyone to ask questions. We have been approved for HAP and submitted a sales contract which has been excepted. My question is about how much money I need to bring to settlement. We sold the house for 190,000 and the buyers asked for 5,400 in seller assist. I understand HAP will pay our closing costs, but do we have to pay the 5,400 dollars ourselves? The total on our closing worksheet is around 17,000 including the 5,400. I just want to have time to save up if I need that much. Also, it usually takes about 60 days from the time they except your sales agreement right? Thank you so much!
I’m not sure where you are located so can only give you a generic answer based on my experience in the DC area. HAP may approve up to 3% closing cost credit if it is usual and customary for your area. As to how much you will need to bring to settlement I can’t answer that specifically as each file is different. The numbers from closing yesterday a seller had to pay a total of $3850.00 to close their deal. The number came down to one month’s payment and one months interest due on the loan. The sales price of the property was around the same as yours. However your purchase price differential may lead to different numbers. Most of my files have closed in a 60-75 day range. Unfortunately this is heavy PCS season so I’ve found a few files that are taking longer for some reason. Hope that helps you a bit but make email contact with the person assigned to your file to get the specifics in your case.
HAP is a load of crap; I missed qualification by one year and became so upside down on my home that I had to short sell it right after I PCS’d to Germany. The housing market began to crash in late 2003 not 2006. I am starting to wonder who is actually benefitting from this program since the qualification criteria is difficult to meet. Oh well, keep bailing Wall Street out.
Richard-I am sorry that you were not able to qualify for HAP. The government set the dates associated with the program and though you are right the market began crashing in some areas earlier than 2006 the program had to have a start date since funding is not unlimited. I’ve personally closed 20 HAP transactions in NOVA and know that thousands of other families have been helped. And I’ve also closed a short sale for someone who missed HAP program dates by only 26 days.
Cindy, I have a question regarding eligibility. The website states you had to purchase your home on or before 1 June 2006. I contracted my home on 11 June 2006. As I understand it, I am not eligible for the HAP program based on this date. I was told however there may be a waiver available or the “law” maybe changed, adjusting the eligibility date. Are you aware of anything like this?
Thanks
James-the program date is on or before JULY 1, 2006. If you were under contract on June 11, 2006 and have your original contract showing a ratified contract date prior to July 1 then you are headed in the right direction. Then you just need to make sure all of the other qualifications line up. I recently went to settlement with owners who ratified the contract on their home on June 30, 2006!
Hi Cindy! I am an agent on the West Coast who has also closed a lot of HAP transactions. I am very thankful to see someone else posting ACCURATE information! Smile. Just wanted to say that for HAP Sacramento District- HAP no longer allows up to 3% closing costs to be paid (even if usual an customary). They stopped in July. They now have a short list of itemized buyer expenses they will cover for the military seller if written in contract. Sellers have to ask HAP benefits processor to review the HUD1 or work a HAP experienced closing agent to know if there is a gap they are responsible to cover. This was a decision by our District’s attorney. We have been fighting it since the other two districts still pay 3% without itemizing. Unfortunately, have not managed to get it overturned as yet.
PS- Nina, if you have not already been late with your mortgage or other bills your credit will likely be just fine if you continue to pay until HAP can close. Otherwise, you will have lates and that will hurt. All HAP sales are uique. I have done two where sellers refinanced and used money for things other than house (credit cards and cars). In that case, they did not have money to cover the part HAP would not. We did “partial” short sales with HAP paying off bulk. They were both current with all mortgage payments. Too soon to tell what it will do to their credit, if anything at all.
Denise-yes HAP did stop paying the flat 3% in July. Of course it would have been nice if they informed both the seller and the agents working on the transactions before they pulled the plug on what had been SOP. We might have changed how we structured sales after that date. However it is still the best benefit around for military families who qualify.
Hello, I noticed from the website that you had to qualify for HAP by 1JUL06. If I bought my home in DEC2006, is there any type of waiver you can get to still qualify, it’s a 5 month difference I know but it would be very helpful since my home has dropped in value quite a bit and I was transferred to Italy.
Hello, I was told to look into this program as we will be receiving pcs orders for june of 2011. We bought our home in aug 2004. We are residing in southern california where we are approx 180,000. upside down with our resale. I am inquiring as to if we are eligible and when and how to begin the application process. also any information with reality companies familiar with this program in our area.
Coey-I had a family who missed the deadline by 26 days and did not get an exception to the policy. However you certainly can contact HAP directly & apply for an exception. The only other alternative is to consider a short sale. Most lenders consider a PCS move a hardship in applying for a short sale.
Robin-at this time (October 29, 2010) the deadline for PCS orders has passed. However updates are expected shortly as to whether there will be an extension of the PCS order date. If so then you may be able to qualify for the benefits.
What if you purchased your home May 2007,and now relocating in 4 months. What help is it for my family?
Thank you
Trina Thomas
Trina-unfortunately you needed to have purchased or been under contract to buy your home prior to July 1, 2006 to be eligible for HAP benefits. Unfortunately if you are upside down and must sell a short sale may be your next option.
[...] For more questions and answers on the USACE Homeowners Assistance Program (HAP) check out: Homeowners Assistance Program is Working for Military Families [...]
I am currently going through the application process. I am so close to the end I can taste it. I was just told that because my home was sold as a short sale (VA Compromise Sale) that ALL my HAP benefits would go directly to the VA. I am so confused by this. The VA has accepted the loss as a compromise on the property and although cannot reinstate my full eliglibity, I do still have a partial COE. When I contated the VA today, I was told I was not required to pay back the loss, that it is a choice. Is my HAP rep correct? or can the benefits be paid out to me?
Thanks
TLandry-I’m afraid I can’t answer your question. It seems reasonable that HAP would not pay you directly for the loss but pay the money to the VA. I would suggest if you believe you are entitled to the funds that you contact the Chief of the RE division in your area for an official ruling.
Hello,
We have a ratified contract for HAP home since Oct 18th, and the sellers agent keep saying that no news to report todate, also we were told that this is private HAP sale ( supposed to be faster)
As a buyer is there anything we can ask to see if the sellers and sellers agent are really pushing hard to get things done ?
Thanks
Larry
Larry-Since you are at day 30 you are a bit early in the process to worry. You can ask the sellers agent to make sure they have gotten the okay on the value of the property, which they should have now and whether the file has been assigned to the benefits department. Once it is in benefits the owner should have a letter stating the “approval” as they work through the details of the funding & getting a check ready for settlement. Good luck.
Hi Cindy,
Thanks for the quick response.
Last reply I got from the sellers agent is “still waiting for a case person to be named “, not sure if I understand that.
Can you please share some of experience in HAP private sales in terms of # of days to close
Thanks
Larry
Larry-days vary based on the sellers place in the que. My experience is from submission of the file to settlement ranges from the shortest time of 49 days to 90 days. The seller should have an initial contact for their file from when it was first submitted. The contact does change when it goes to benefits so perhaps that is what they are waiting for?
Cindy,
Thanks for taking time to reply to my questions, we are hoping to close before Christmas ( ~ 70 Days).
Larry-best of luck and hopefully you will be enjoying your new home for the holidays.
We sold our home via short sale in CA. WHile not personally liable for the difference between the mortgage amount and sale price, we still lost our $100,000 down payment. We satisfied all other criteria under the old HAP rules except the purchase price limit of $557,500. Now under the new rules the limit is $729,750 so we could appeal that decision. However, it also looks like under the new rules if a seller is fully released from liability after a short sale, no benefit will be paid. Am I correct or can we apply to get our down payment back. Thanks
It is my understanding that HAP will not pay any benefits directly to the seller if they were released from liability by their lender during a short sale. You can certainly appeal your decision to see if you have any option on recovering any of your down payment. The $729K limit isn’t new (in my area) it just has a better definition on how the limit is applied.
So if our house in California cost more than $729k can we not use Hap, even if we owe $600,000? We paid 832,000 in 2005. House appraised for $500,000. We hope to get orders overseas in the next few months. If we can’t use HAP, and rent house out waiting for market to get better, we wonder if we’d lose some primary residence protection in Ca. We haven’t been able to refinance due to being in a jumbo loan, so loan is still purchase money so should be protected from deficiency judgment. What’s the latest on how short sales or foreclosures affect security clearance? We have one in college and two more children going in next three years, husband wants to retire but can’t afford to do it in this house when loan we’re stuck in adjusts in a couple years. Is our only hope the market will go up to not lose all the equity, plus interest, we’ve put in this house the last 6 years? Sounds like due to our federal governments’ money problems we could lose mortgage interest deduction too in the next couple of years . Your thoughts on our situation?
Concerning above, house appraised for $500,000 a year ago when we tried to refinance. When we purchased for $832,000 in 2005 of course it appraised for that.
Julia-here is what the Federal Registry says re homes over $729K for HAP. This is a clarification to the previous rules and is still under review. You can also apply for an exception to the 729K limit to the head of USACE if this clarification isn’t official added to the current rules in January.
“Prior Fair Market Value (PFMV). The PFMV is the purchase price of the primary residence. Benefits will be calculated using the amount of $729,750 as the PFMV for primary residences with a PFMV that exceeds $729,750.”
Cindy -
My wife and I are currently in the early stages of the HAP application process and have been getting mixed feedback on our concern of dates.
My official closing date (settlement date) for my home in Annapolis was 24 July 2006, however my “Residential Contract of Sale” (which is the legally binding contract that the sale is based off of) is dated 26 June 2006.
My wife has contacted the HAP Field Office in Savannah (800-861-8144) and the representative stated as long as we have proof that there was “an agreement to purchase the home before 1 July 2006, that we’re in luck.” I want to ensure this is accurate and aligned with what is needed to meet the HAP requirement? In the meantime we are calling again and attempting to get this in writing so there’s no hiccups with our plans.
Also, can you recommend any agents in the Annapolis, MD area with HAP experience. Thanks in advance for any and all help!
-Chad
I closed a property this summer which had a ratified contract date, clearly shown on the last page of the contract, which was on June 29, 2006 and did not close until after July 1. We did not have an issues. I would be glad to send you a recommendation for an agent in Annapolis. Just drop me an email to [email protected].
Good afternoon my wife and I went into contract on 3 Nov 10 to purchase a HAP home, everything went through on schedule it was processed through the benifits department. My understanding is once it goes to benifits the seller will get a letter saying that its good to go, but i got an extension letter instead. How longer do we have to wait until we get the letter of approval letter. I am a fellow service member so i understand that these things take time but at what point do i start looking for another home for my family thanks
Hi Cindy,
Like so many others here I thank you for all of your info and answers on this site. Greatly appreciate everything you do to help those of us impacted by the housing market and military orders.
Hoping you can answer a question for me. Contracted for our house on 28 May 2006 (settled on 14 July 2006) for $405,000. I was issued orders to PCS to Annapolis in May 2009. We couldn’t sell the house at the time of the PCS but were able to get it rented. Our lease is up in May 2011, and I’m now preparing to submit HAP application in anticipation of selling in conjunction with end of the lease. Tax appraisal at the time of the sale was $410,00, and by 2009 the appraisal had dropped to $321,000. While I’m not 100% sure whether the FMV prices in the area will corroborate this drop in value >10%, I’m quite confident they will thereby enabling us to qualify.
Questions (1) does having the home rented for 2 years negatively impact our eligibility for HAP? (2) I think we could possibly sell right around the 90% value of $405,000. Obviously if we sell for even the slightest bit above that 90% value we won’t be eligible for benefits. Is it better to sell even $1000 less than the 90% value just to try to get closing costs reimbursed?
Thanks again Cindy – you’re the best! Michael
Add’l info on my post just above. We put quite a bit down on the house making our mortgage only $285,000. We also took an equity line, most of which was used for home improvements – so total we owe is about $333,000. I do not think our sale will leave us short (on the mortgage/equity line at least – sure will be short on our equity we put in). Michael
Cindy,
Here’s our situation… we bought our home in MS in May 2005 and were reassigned to TX in June 2009. We attempted to sale our home for about 18 months before we left in 2009. We didn’t get any offers and ended up renting the home. Now our renters will be vacating our home in June of this year when their lease is up. We owe $187,000 on the 1st Mortgage and $41,000 on the 2nd Mortgage. But the home is probably only worth about $190,000 – $200,000 (maybe).
So my question is under HAP can the government just purchase/aquire my home and I be relieved of the debt or do I need to attempt to put it back on the market?
Thank you for any advice you can give.
Michael,
Having your home rented out for two years does not take away your eligibility for HAP. I’m not sure where you home is but I would ask a local real estate agent to give you an up-to-date CMA to see where you stand in relation to the 90% of FMV.
Since you put a good deal of money into the home you most likely want to go the augmented sale route. You need to be prepared to cover the difference in the equity line and the home improvements though. It will all come down to the formula and it sounds as if you might be close.
Keith,
No under HAP (PCS) the government will not purchase your home. It does have to go on the market and a buyer has to be located. Then the government flips the home to the buyer at the same time they acquire the property from you. If your home is in Northern Virginia let me know and I’d be glad to assist you in getting it sold.
Jermanie-did the extension letter come from the real estate agent because HAP needed more time or from HAP? I suspect with the multiple holidays you could hit a delay. It generally is 45-60 days from the date of when the file hits benefits until closing.
HI Cindy
My husband and I ara applying for HAP and trying to sell our house in the hopewell area of Virginia while stationed in Texas can you recomend any realtors that work in our area?
Thanks for all the info
Hi Cindy,
Thanks for the info, Hap was the one that asked for more time however I think its oving right along, HAP asked my realtor for some info. I think its in the final stage about how soon after should I recieve the new Contract. I know it takes time
Hi again Cindi,
Today my wife and I signed the the HAP contract at what point should we get a closing date. I was wondering with your experiance what kind of time frame are we looking at. thamks
Jermaine-less than 30 days and can be as quick as 10. A lot depends on how fast your settlement company turns around the information to the settlement company in your area represented by HAP.
Cindy, you’re so awesome. Thank you so much for spending time to help complete strangers! There aren’t very many people experienced with the HAP program at all. Anywhere. So, my question for you, and I do know that all situations are unique, and that is fine, I just sort of want to get a feel of what I’m dealing with. I’m looking at a house that is already been approved for the program, and it is listed at 299. It has been on the market for two years, and has been decreased several times. They still owe 340 to my knowledge and haven’t made a payment in a year. How does the 90% thing work exactly? Is it fair to say that we could obtain the house for significantly less? No one has made a single offer on the house, so we have nothing to go by as far as what they would approve. So if we offered 200, that’s 120K less than what they owe. The HAP program pays for 90% of the loss, and the owners would then have to pay the remaining 10% to their bank? Have you seen a deal similar to that? The market here is sooo terrible, and this house is literally just sitting there with no interest, no buyers, no lookers!
Michelle-you don’t mention if the seller is active duty military or part of BRAC 05 as there are two different programs & different benefits.
Homes must be sold within 10% of fair market value (FMV). If the FMV is 299K then the owner will not be approved for benefits when the contract is reviewed by their regional HAP office. Offering 200K won’t fly unless that is FMV. There are another other parts of the scenario you mentioned that are incorrect information or issues based on what you stated but without knowing all of the specifics for this seller I don’t want to speculate.
Cindy, I called my HAP office(Sacramento) back in late Nov, early Dec and they told me there was not an update for the program to be extended for members PCS’ing after Sept 2010. I just read over 32_CFR_Final Rule and to me it seems it has been extended till 2012.
Please clarify!!
Thanks for your help.
Thanks for all the info, Cindy. Too bad the Governement couldn’t be a thorough!!!!
Joe-I don’t have an official answer. The new regs allowed for the possibility for the date to be extended based on funding. There are still thousands of applications being processed, per my last contact with Savannah Office, for folks who had PCS orders prior to the 9/2010 deadline. HR 6272 introduced by Gabby Giffords last September to extend the deadline did not make it out of committee.
Emmett-I keep trying to dig up and stay on top of as much information on the program as possible. Unfortunately sometimes it is contradictory.
Cindy, Thanks for your help!! I am approved for the military PCS HAP program, have buyer, no missed payments, no 2nd mortgage and package is in benefits section. My question is do I have to pay the 10% difference in the PFMV and the amount that HAP uses to calculate the benefit amount? No one has mentioned the 10%. Example:
200,000 (PFMV and/or purchase price)
180,000 (purchase price x 90%)
119,000 (sale price)
61,000 (benefit amount +/- realter fees & closing costs)