Due to the draw-down of the 33rd Fighter Wing at the Eglin AFB complex, approximately 2000 airmen are being relocated from the Emerald Coast of Florida to other air force bases around the country and world. In addition, about 1000 personnel from Hurlburt Field are moving to Cannon AFB in Clovis, New Mexico. Unfortunately, airmen in the Fort Walton Beach, Crestview, Navarre, Niceville and Destin areas of Florida are facing the same predicament as most Americans. Many have mortgage balances that are more than the market value of their homes. Typically, when faced with a forced military move, and such choices as to lease out their homes with insufficent rent to cover the mortgage, or foreclosure, the preferred strategy was to conduct a short sale. A short sale occurs when the seller's mortgage holder accepts fair market value at sale of the property, and, in the best case scenario, forgives the rest of the mortgage debt.
The good news for Eglin and Hurlburt Field military personnel is that further financial help may be available through the Homeowners Assistance Program (HAP). HAP is a long-established Department of Defense program that is managed by the US Army Corps or Engineers. HAP was initially used only to assist in Base Realignment and Closure (BRAC) moves, but the new economic stimulus plan has expanded the program to include Permanent Change of Stations (PCS) moves.
What HAP offers in terms of relief is the following:
The Government may-
1. Reimburse you for part of your loss from selling your home
2. Assist you, if you don't receive enough proceeds from the sale of your home to
pay off your mortgage
3. Help you, if you default on your mortgage, if you are a surving spouse or certain civil service
Further, HAP states you should continue try to sell your home on the open market. At this writing, according to the program, you may be paid up to 95% of the difference of the Fair Market Value prior to the BRAC or PCS announcement affecting you, and the appraised value at time of sale, with potential for some closing cost reimbursement. HAP will not reimburse for the total loss. At the time of this writing, I have three Hurlburt Field and Eglin AFB home sellers who have applied for HAP simultaneously while attempting a short sale. How the government will interact with short sale lenders is to be determined.
Local Eglin AFB commanders are still trying to get formal interpretation of the program as it applies to Emerald Coast airmen. At this time, there are no specifics, so any published information is subject to change. Of note, one of the controversial limits of the program expansion in the new American Recovery and Stimulous Act is that it applies only to homes purchased prior to July 2006. This limiting date does not correspond to the still-inflated real estate market in the ensuing months, in which many military members continued to purchase homes as outlined by Air Force Major Jason Trew's Letter to Congress.
While the language in the current bill is still being interpreted by Air Force authorities, you might be eligible to receive benefits under the new legislation. If you are in a short sale situation, stationed at Eglin AFB, Hurlburt Field or Duke Field, you should see your commander or first sergeant and make your Application for Homeowner Assistance.
For more information, read my follow up post HAP Update: Eglin AFB and Hurlburt Field. As always, consult an experienced real estate agent to help you through the process.
It's Wendy!
Wendy Rulnick, Broker, Rulnick Realty
Featured Short Sale Specialist in "Kiplinger Magazine"
Email: itswendy@rulnickrealty.com
Call Wendy at 850-650-7883 ext 204
All Rights Reserved. *Eglin AFB and Hurlburt Field: Homeowners Assistance Program (HAP) for Short Sales* Contact Wendy Rulnick regarding Eglin AFB and Hurlburt Field, Florida real estate and vicinity. Copyright © 2009 by Wendy Rulnick.
Those in the military should be able to have a fall back plan if a short sale does not work. They certainly deserve it!
Hi Bill - Yeah, it's certainly a tough position to have a military relo and an upside-down house you cannot rent! Thanks for the comment :)
I'm pretty sure that active military are exempt from being foreclosed on.
www.legalassistance.law.af.mil/content/locator.php.
http://portal.hud.gov/portal/page_pageid=73,1827293&_dad=portal&_schema=PORTAL
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Servicemembers Civil Relief Act (SCRA) Common Questions
Who is eligible?
The Act applies to active duty military personnel who had a mortgage obligation before enlistment or before being ordered to active duty. This includes:
· Members of the Army, Navy, Marine Corps, Air Force, Coast Guard.
· Commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration engaged in active service.
· Reservists ordered to report for military service.
· People ordered to report for induction under the Military Selective Service Act.
· Guardsmen called to active service for more than 30 consecutive days.
In limited situations, dependents of servicemembers are also entitled to protections.
Am I entitled to debt payment relief?
The Act limits interest that may be charged on mortgages taken out by a servicemember (including debts incurred jointly with a spouse) before he or she entered into active military service. At your request, lenders must reduce the interest rate to no more than 6% per year during the period of active military service and recalculate your payments to reflect the lower rate. This provision applies to both conventional and government-insured mortgages.
Is the interest rate limitation automatic?
No. To ask for this temporary interest rate reduction, you must submit a written request to your mortgage lender and include a copy of your military orders. The request may be submitted as soon as the orders are issued, but no later than 180 days after the date of your release from active duty military service.
Am I eligible even if I can afford to pay my mortgage at a higher interest rate?
If a mortgage lender believes that military service has not affected your ability to repay your mortgage, they have the right to ask a court to grant relief from the interest rate reduction. This does not happen very often.
What if I can't afford to pay my mortgage even at the lower rate?
Your mortgage lender may let you stop paying the principal amount due on your loan during active duty service. Lenders are not required to do this but they generally try to work with servicemembers to keep them in their homes. You will still owe this amount after you complete active duty service.
Most lenders have other programs to assist borrowers who can't make their mortgage payments. If you or your spouse finds yourself in this position at any time before or after active duty service, contact your lender immediately and ask about loss mitigation options. If you have an FHA-insured loan and are having difficulty making mortgage payments, you may also be eligible for special forbearance and other loss mitigation options.
Am I protected against foreclosure?
Mortgage lenders may not foreclose while you are on active duty or within 90 days after military service without court approval. A lender would be required to show in court that your ability to repay the debt was not affected by your military service.
What information do I need to provide to my lender?
When you or your representative contacts your mortgage lender, you should provide the following information:
· Notice that you have been called to active duty.
· A copy of the orders from the military notifying you of your activation.
· Your FHA case number.
· Evidence that the debt precedes your activation date.
HUD has reminded FHA lenders of their obligation to follow the SCRA. When notified that a borrower is on active military duty, an FHA lender must inform the borrower or representative of the adjusted payment amount due, provide adjusted coupons or billings, and ensure adjusted payments are not considered insufficient payments.
Will my payments change later? Will I need to pay back the interest rate "subsidy" at a later date?
The change in interest rate is not a subsidy. Interest in excess of 6% per year that would otherwise have been charged is forgiven. However, the reduction in the interest rate and monthly payment amount only applies during the period of active duty. Once the period of active military service ends, the interest rate will revert back to the original interest rate, and payments will be recalculated accordingly.
How long does the benefit last? Does the period begin and end with my tour of duty?
Interest rate reductions are only for the period of active military service. Other benefits, such as postponement (delaying) of monthly principal payments and restrictions on foreclosure on the loan may begin immediately upon assignment to active military service and end on the third month following the term of active duty assignment.
How can I learn more about relief available to active duty military personnel?
Servicemembers who have questions about the SCRA or the protections to which they may be entitled, can contact their unit judge advocate or installation legal assistance officer. Dependents of servicemembers can also contact or visit local military legal assistance offices where they live. A military legal assistance office locator for each branch of the armed forces is available at www.legalassistance.law.af.mil