Updated News For Servicemembers Upside Down On Their Mortgage

A few weeks ago major lenders including Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo were fined for violating the Servicemembers Civil Relief Act for illegal foreclosures.   Today the White House announced additional information related specifically to assisting servicemembers who are upside down on their mortgage.

The first part of the new initiative includes:

Compensating Servicemembers Wrongfully Charged Higher Interest Rates
: Servicers will conduct a review – also overseen by DOJ’s Civil Rights Division – of the files of their servicemember clients dating back to 2008 to determine whether they charged any an interest rate in excess of 6% on their mortgage after a valid request to lower the rate, in violation of the SCRA.  Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to at least four times the amount wrongfully charged.

Previously I had written on lenders accepting PCS orders as a hardship of a short sale.  The initiative spells this out even more clearly:

Providing Relief for Servicemembers Forced to Sell Their Home at a Loss Due to a Permanent Change in Station:  Under the Department of Defense’s Homeowners’ Assistance Program (HAP), some servicemembers who are forced to sell their home at a loss due to a Permanent Change in Station (PCS) may be compensated for the loss in their home’s value. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP.

For those who are asking whether this means HAP itself has been extended the answer is no.  Per an update to the HAP website:

“While the announcement outlines additional avenues for service members to pursue benefits, it does not expand the benefits provided under the Expanded Homeowners Assistance Program (HAP), established under the American Recovery and Reinvestment Act of 2009, or change the eligibility requirements of the HAP.”

If you are a Northern Virginia service member who did not qualify for DoD HAP benefits and wants to get their home sold give me a call.  I’ve successful completed multiple HAP transactions, short sales and VA Compromise sales for servicemembers in the Northern Virginia area.  If you are eligible for HAP it’s time to get your home on the market.  HAP will not accept applications after September 30, 2012 whether you meet the eligibility requirements or not.

Here is the full report from the White House today on the Relief for Military Servicemembers and Veterans

22 thoughts on “Updated News For Servicemembers Upside Down On Their Mortgage

  1. Ma’am,

    This article is very interesting in that I find myself inthis exact position. I am currently serving a 1 year tour in Korea, due to return to the Tidewater area of Virginia in May of this year; at which time we will be PCS’ing to California. My wife and I purchased our house in virginia on 14 Feb. 2007 for $249K, spent in the ballpark of $30k in upgrades, and now, after 16 months on the market, are being forced to either short sale or forclose. Current list price for the property is $229K, and we will be lucky to see that. We are not eligilble for the HAP, or, as far as i can find, any other program that would help us. Time is very short now; if this initiative is actually passed it could go a long away to helping us avoid quite a bit of financial hardship. If you have any additional information on this, i would loe to hear it. thanks for your support, and God Bless.

    V/R,

    J. M. Wilcox

  2. Jon-yesterday’s announcement from the White House should mean good news for you. Though I am not sure HAP deadlines were extended it is obvious that lenders are now required to move forward with short sales for servicemembers without penalty. Contact your lender right away and send them a copy of yesterdays White House memorandum.

  3. I am in the same boat. Bought a house in Albuquerque New Mexico area in June 07, Paid $345K for it and last estimate came in around $290K. We will be leaving July next year. Hope this somewhat helps us.

  4. Denny contact your lender right away. My conversations with a couple of national lenders hasn’t yielded much in the way of results as I think they are all trying to sort out what they need to do.

  5. Since I had linked to the White House memorandum that outlined the settlement having the entire article from Realty Times in a comment was to large. I have included the link back to your article. Thanks.

  6. This announcement / benefit appears to be a bit hollow. I too was hopeful we’d found an answer to our PCS/upside-down mortgage problem. Unfortunately, since my lender sold my mortgage to Freddie Mac (like they do with many apparently, and without telling me), I’m not eligible. Freddie Mac and Fannie Mae owned loans are not eligible, regardless of who originated or services the loan. From what I’ve read a huge number of mortgages are actually owned by Fannie and Freddie.

  7. Derek-Fannie Mae has a Military Hotline number 877-645-4566. They have a specific set of options for the military. I have worked with Fannie backed loans on a military short sale and most lenders before this announcement considered PCS orders a hardship for a short sale. Check directly with Fannie Mae and press your lender hard.

  8. We bought in 07, and are currently upside down with pcs orders in hand, I’ve called our bank, chase, and they have said it “takes time” for these programs to roll out. I want someone to tell me, A)do I qualify for a short sale because of the pcs orders, B) will they research all of my financials and take my savings to make up the difference , and C) will this effect my credit and chances of purchasing at our next duty station. Oh, and can someone tell me NOW as we are due to leave in 2 months,..

  9. Hat-I would suggest that you go right to the top at Chase. Let them know you are active duty military with PCS orders in hand.

    Try this number and let me know how it goes.

    Executive Resolution Group for Chase, 866-605-9253

  10. Wow, they sent me right back to the military number where I finally did get an answer of , “of course a short sale will will negatively impact your credit score”. Well, how then does this program help someone who is upside down but wants to take advantage of this buyers market on the other side of the PCS. I guess it doesn’t. I think I’m going to outline all my concerns and frustrations in a letter.

  11. Cindy, was wondering if you have advice for me. My mortgage is through Wells Fargo, but I just learned it’s owned by Fannie Mae. I bought a home in Winchester, VA in April 2006 for $265K, would be lucky to get $150K right now in a short sale. I went onto active duty (Army) in March 2011, and as a new accession with PCS orders to Georgia after Sep 2010, I don’t appear to qualify for HAP. Any thoughts on if these recent developments will help me? Who can/should I call? Thanks.

  12. Two Questions:

    1) I have never listed my house for sales (for appearnace reasons) and the contract I have hired to fix it has offered me $80k – I owe $133k – Do you think HAP still applies?
    2)Does the short sale deficiency waiver apply to those who bought there house before July 1, 2006?

  13. Boo-I don’t know where you are located but I can tell you that HAP requires a home to be sold within 10% of current Fair Market Value. You will need to check with a local Realtor® to determine the current market value for you home to see if the 80K price is within that value.

    If it is and you meet the qualifications for HAP outlined on the USACE website then you could apply for HAP and present the contract for the 80K along with the required comps to support the price range.

    Cindy

  14. My wife and I unfortunately had to do a short sale back in 09 when I received orders. We lived in the home for 7 years. Due to the short sale we sold the home for much less then we purchased the home for. We heard about the HAP offered by the USACE. After countless phone calls and applications to be filled, my wife and I qualified for a reimbursement under the rules and regulations passed for the program in 2009. We finally received a payment of 9000.00. A loss well within the 10% allowable presented by the USACE. Here we are going on 3 years later, I receive a package in the mail form such, saying that they made a mistake and overpaid us and that we are responsible for making this payment within 30days. If we are unable we can make installment plans until paid in full. I can understand a slight overpayment….Not the entire 9000.00 due to an error on their part. Something is seriously wrong with this situation. Has anyone else experienced this recently and if so what did you do to assist you? I am currently scheduled to see a lawyer tomorrow who has dealt with a similar situation where he was able to get a waiver for the debt owed due to government error.

  15. George-it has always been my understanding and written in the IG Report on HAP that if a servicemember undertook a short sale and had no deficiency to pay that then HAP did not reimburse any costs that were not “out of pocket.” You can check Page 32 of the IG Report.

    I have heard of a few others recently who have received the same letter and request for reimbursement from USACE for what may have been incorrect payments.

  16. Do you know if any of this is still valid? I am in Northern Florida, Jacksonville Area, we own a Townhouse that we are upside down in and have PCS orders for Nebraska at the beginning of the year. I have no idea what to do and we currently have renters in the home who have notified me that they will be moving after the lease is up. My husband is deployed and I am not sure who I should talk to. The mortgage is VA backed with Wells Fargo and in his name, though I have a proper POA. Any help would be very appreciated.

  17. Hi there! I bought a house in Las Vegas, Nevada for 214,900.00 back in March 2005. I received PCS orders and executed the in March of 2007. At thos time the market seemed to already be turning for the worst. I left the house with a roommate and still claim it as a secondary home. As the market was declining I had researched options to bail out of it and no matter where I inquired about It I could not find a program or any options to help me. Although I have periodically, since then, looked to see if maybe I can uncover some options to bring me some relief. I have looked into the market value of the homes in the area and to the best of my knowledge my home is worth approximately $79.000 and I still owe around $185,000,00. I have contacted Citimortgage (the primary mortgager)to see how they might be able to help me and I’ve gotten nowhere. The really true problem with this house is that I purchased its using my VA benefits on a 3/1 arm. Unlike everyone else’s interest rates which possibly went up, mine went down and is currently at 2.125%. Not a single lender, broker or otherwise wants to entertain getting involved because of that. For me that interest rate would be great but I have a second mortgage for $52,000 at an interest rate of 12.14%.
    Now, I’m not looking to run away from my responsibilities but I am on my second set of orders since I left Las Vegas in 2007 and I still have been unable to find resolve in my case. Maybe you can offer me some advice as to where I may find someone could helping. If you can that would be great.

    Sincerely,
    Robert Throckmorton

  18. Robert,

    If you don’t mind I’ll pass your name and email address to a friend of mine who is an agent in Las Vegas. She knows the market and has had a lot of success with short sales. She can give you the skinny on your options, current pricing etc. I understand the market in Vegas has had a nice turn around recently. I’m sure not to what you owe but better than it was a year ago.

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