Put yourself in their combat boots: You bought a home during the housing boom only to be forced to sell it during the housing bust due to a base transfer or deployment to a combat zone. It wasn't your call but you'll be saddled for years with the financial loss, and possibly the collateral damage to your credit.
Military families don't have the luxury of waiting out a market downturn. For them, the financial danger of being upside-down in their mortgage is every bit as real and stress-inducing as staring down a roadside IED.
Fortunately, when our troops found themselves in a firefight between an entrenched recession and a hostile housing market, the little-known Homeowners Assistance Program, or HAP, had their back, thanks to an expansion of benefits provision in the American Recovery and Reinvestment Act of 2009.
HAP was originally authorized in 1966 to provide financial assistance for active service personnel and the military's civilian employees who suffer a loss on the sale of their primary residence when a base realignment and closure, or BRAC, causes a local decline in the real estate market. The Army Corps of Engineers was given the task of analyzing the local market, conducting a market survey and recommending relief if a link was found between a BRAC and a home's unreasonably-low market value.
When the U.S. housing market tanked, Congress provided $855 million in stimulus money to temporarily expand the program to provide relief for GI homeowners ambushed by the housing bust. Over the past 20 months, HAP has provided nearly $795 million to more than 5,000 families.
The aid takes several forms: assisting the seller to pay off their mortgage in a sale, reimbursing them for their loss on a sale, helping out a soldier in default or buying homes outright that just won't sell. The program also can pay off enforceable liabilities after the fact for soldiers who have suffered foreclosure.
Service members have an additional reason to fear foreclosure: it could cost them their security clearance. The military places a high priority on paying one's debts, and financial trouble is a leading cause of having one's security clearance revoked, according to Holly Petraeus, new head of the Office of Servicemember Affairs within the Consumer Financial Protection Bureau. Lose your clearance and your prospects for advancement narrow considerably.
The HAP expansion is only temporary. In fact, it only applies to defense personnel who purchased their homes before July 1, 2006, and sell them by Sept. 30, 2012, pending availability of funds. With just $60 million of the original stimulus money remaining and Congress in a frugal funk, it's uncertain whether the HAP expansion will be extended, despite our stubbornly slumbering housing market.
Have you or a loved one received help from HAP? Have you been denied benefits under the expansion of the program? And are you for or against continuing the expansion in the coming years?
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