Homeowners Assistance Program

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Homeowners Assistance Program American Recovery
and Reinvestment Act
COL Shawn Shumake Director of Legal
Policy DUSD-PI/LP May 15, 2009 703-697-3387 david
.shumake_at_osd.mil
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Homeowners Assistance Program

• American Recovery and Reinvestment ActThe
  Stimulus Act.
• Expands currently existing Homeowners
  Assistance Program (HAP)(42 USC 3374)
• Appropriates 555M
• Previous BRAC authority
• Tied to relocation and drop in housing prices due
  to closing and realignment
• causation

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Homeowners Assistance Program

• ARRA Expands HAP (Feb 09) to cover
• Service member who PCSs and sells for loss, or
  cant sell
• BRAC 2005 (no causation required)
• Wounded, Injured, Ill
• Warriors
• Civilians
• Surviving Spouses warriors or civilians

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Homeowners Assistance Program

• General Principles (Statutory)
• PCS
• Reassigned 50 miles
• Reassignment orders 1 Feb 06 thru 30 Sep 12
• Primary Residence purchased
• BRAC 2005 (no causation)
• Fed/NAFI employee
• Employment ended w/BRACd entity
• Primary Residence purchased
• Forced to accept employment outside normal
  commuting distance

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Homeowners Assistance Program

• General Principles (Statutory)(cont)
• Wounded Warrior (some civilians)
• Wound, injury, illness in LOD deployed
• Disabled 30
• Reassigned for medical treatment or medical
  retirement
• Surviving Spouse
• Member or civilian employee killed in LOD or
  during deployment after 9-11 in support of Armed
  Forces
• Member dies from wound, injury, or illness during
  such a deployment
• Spouse relocates from residence w/in 2 years

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Homeowners Assistance Program

• Principles of Compensation (Statutory)
• Discretion w/ SECDEF to pay not more than
• Private sale 95 of Prior Fair Market Value
  (PFMV) minus FMV at time of sale (generally sales
  price)
• DoD buys or subsidizes sale 90 of PFMV or
  amount of outstanding mortgage

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Homeowners Assistance Program

• Policy Implementation
• ATL/Comptroller
• US Army (Corps of Engineers) executive agent
• Timeline
• May SECDEF Approves General Principles
• May Army completes implementing regulations
• June Regulations coordinated with PR/Services?
  
• June OMB/Interagency coordination
• July Payments allowed during Fed Reg comment
  period

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Homeowners Assistance Program

• Proposed Policy Implementation (cont)
• 555M
• Fence Wounded Warriors
• Fence BRAC 2005
• Administrative Costs
• Closing/Settlement Costs
• PCS
• Whats left?

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Homeowners Assistance Program

• Proposed Policy Implementation (cont)
• Eligibility Floor
• 10 Regional Market Decline
• 10 Personal loss (purchase price/sales price)
• PCS, BRAC only, Not WW/SS
• Eligibility Ceiling
• Maximum Home Purchase Price
• 417K to 729.5K
• Fannie/Freddie conforming loan limits for 2009
• Prior Fair Market Value Purchase Price

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Homeowners Assistance Program

• Proposed Policy Implementation
• Modifies Statutory Compensation Scheme
• Private Sale
• 90 (reduced from statutory 95 max) of PFMV-FMV
  at sale (sales price)
• Cant sell DoD purchases
• Amount of outstanding mortgage OR
• 75 FMV (reduced from statutory 90 max)

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Down Payment 10

• Purchase price 600,000
• Borrowed 500,000 (100K downpayment)
• Sold 525,000
• 90 of 600K minus 525K sales price
• 540K - 525 15K
• Member receives 25K at closing
• (525K - 500K)
• HAP pays 15K (recovers total of 40K of down
  payment)

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Down Payment 10 Underwater

• Purchase price 600,000
• Borrowed 500,000 (100K down)
• Sold 450,000
• 90 of 600K minus 450K sales price540K -
  450K 90K
• HAP pays 90K
• 50K goes to pay off mortgage
• 40K goes to member

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Down Payment

Purchase price 600,000

Borrowed 600,000

Sold 450,000

Outstanding Mortgage

HAP pays 150K

150k goes to pay off mortgage

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Homeowners Assistance Program

• Concerns
• Does this become an entitlement?
• Is this the answer?
• Its taxable!
• What help is available for those not eligible for
  this program?
• Counseling?
• Legal Assistance?
• Loan restructuring laws/programs
• JFTR Authority to pay BAH at old PDS?
• Rotation policy considerations?

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Homeowners Assistance Program

• Concerns (cont)
• Implementing Regulations
• Treatment of those already foreclosed on?
• Does the 50-mile rule apply to WW? No nexus
  required between the move and treatment.
• Definition of deployed for WW?
• Civilians reassigned for medical treatment?
• Claims from former members who moved due to
  retirement, adverse separations?
• How do home equity loans affect payments based on
  mortgages?

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Homeowners Assistance Program

• Concerns (cont)
• Implementing Regulations
• Withdrawal of applications?
• Perfecting applications already submitted?
• How to handle arrearage payments arising before
  PCS?
• Definition of Principal Residence
• Minimum effort to sell 120 days on the market?
  

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Homeowners Assistance Program

• Questions?