Military homeowners applying for help with financial losses associated with selling a home should take note of some tips from the Army Corps of Engineers, which administers the expanded Homeowners Assistance Program.
If you think you qualify for HAP because of a permanent change-of-station move and haven't applied, do it now. Money is limited, and there are a lot of people ahead of you.
Some advice for successfully navigating the program: If you're in the process of trying to sell your home, be careful in negotiations with buyers, said Don Chapman, assistant manager of HAP. For one thing, HAP can't cover buyers' credits — reductions in the asking price for specific items.
So if your contract includes a $5,000 credit for a new roof, for example, you won't be reimbursed for that $5,000.
Instead, Chapman said, if you and the buyer agree that the house needs a new roof, get it done before closing. You can then claim it as an improvement on the home, which would be added to its "prior fair-market value" — what HAP reimbursement is based on.
In this case, that value is defined as the applicant's original purchase price. The cost of improvements can be added to the purchase price, if you have receipts.
The Defense Department has restricted assistance under the expanded HAP to those whose reassignment was ordered between Feb. 1, 2006, and Sept. 30, 2010.
The cutoff date doesn't mean you have to apply by Sept. 30; it just refers to the date of your PCS orders.
The Sept. 30 cutoff date does not apply to those in the other three categories — wounded, ill and injured warriors; surviving spouses; and those affected by base realignments and closures.
For those in the PCS category, the sale must have gone to closing, or a contract been signed for purchase, before July 1, 2006, and the property must have been the principal residence of the owner.
In many cases, homeowners have had to rent their properties to others when they were unable to sell; those homeowners generally would still qualify. Visit http://hap.usace.army.mil">http://hap.usace.army.mil for more details.
If you've already sold your home at a loss, it falls under the "private sale" definition. In this case, beneficiaries in the PCS category are reimbursed for 90 percent of the prior fair-market value (the HAP applicant's purchase price for the home, adjusted for improvements, if applicable), plus allowable closing costs.
If you're "upside-down" on your mortgage — owing more than your home is worth — your benefit is defined as "government purchase."
The government will pay 75 percent of the prior fair-market value or the mortgage payoff for those in the PCS category, whichever is greater.
But these HAP applicants must bring an approved buyer to the closing table. And in this case, if you've signed a contract with a $5,000 credit to the buyer for a roof, you'll have to provide a check to the government at closing for that $5,000, and won't get reimbursed.
In addition: Don't delay submitting your application, and respond to HAP officials' questions.
As of Aug. 11, HAP had paid nearly $383 million to 2,622 people. Another 5,003 eligible applicants are awaiting benefits, many of them seeking buyers for their homes. Congress has appropriated $855 million for the program, and about $472 million is left.
Program rules require HAP officials to process applications for wounded warriors, surviving spouses, and those affected by the 2005 BRAC actions ahead of those in the PCS category.
Work hard to find a buyer for your house. Chapman reminded service members in the PCS category that HAP can't come to the closing table with you until you have a buyer. So a service member who made a PCS move in December 2008 and just found a buyer will be ahead of you if you're making a PCS move this summer and don't have a buyer for your house. HAP gives priority to those who apply earliest, but you still have to bring a buyer to the table.
You need a financial game plan. If you're moving now, you've got hard choices. You may have to leave your family behind until HAP has completed its approval process and is ready to go to closing with you. Or, for example, you could look for a buyer who will rent your house until HAP is ready to close.
Financially, that may be smarter than putting yourself in a bind by buying a house at the new duty station or even renting one.
Chapman pointed out that the program "is designed to protect you from catastrophic financial loss. It is not designed to make your PCS move stress-free."
And just in case you might be thinking of trying to pull rank, it won't work. Just because you're a lieutenant colonel or a first sergeant, don't expect HAP to move you in front of more junior troops.