Help available for military hit by housing market
February 27, 2009
WASHINGTON (Army News Service Feb. 26, 2009) - Some military families are finding themselves in a precarious situation when it comes to selling their house and relocating, said housing experts.
Some bought their homes at the height of the market and now, because of permanent-change-of-station orders, are trying to sell in today's lower market, said Edmond Hackett, housing management specialist, Fort Belvoir, Va. The good news is that the new economic stimulus package has provisions to help military homeowners and Army Emergency Relief is also helping those hit by the crunch.
"It's a reality in this area and all over, there are a lot of foreclosures and this is affecting our Soldiers too," said Hackett. "Many sellers can now expect to sell below their purchase price."
The flip side of this housing market is that renters are not immune to the effects of foreclosure either.
"In the past couple of months, approximately five Army families have had to deal with losing the homes they were renting when the owners faced foreclosures," said Shawn Walters, housing management specialist, Fort Belvoir. "One good thing for these families is that now the government will move them, that's a big change from the past and is a real help to the families."
An attachment to the Joint Federal Travel Regulations added about five months ago authorizes a local or short-distance move of household goods for servicemembers forced to relocate because the home they were renting is in foreclosure.
Although there are no specific programs to help Soldiers when they are behind in their mortgage, Army Emergency Relief is an avenue for assistance in this tough market, said Dennis Scott, assistant secretary of administration, AER.
"Since the housing market crashed, we are looking at housing differently," said Scott. "Multiple-home ownership used to be considered a business venture and AER doesn't assist in that, but now we realize it might be because of an inability to sell in one location."
When applying for assistance at AER, it must be a solution to the problem not a partial fix said Scott.
"If you need to catch up on your mortgage and once caught up you can continue to pay because of a new job or a raise that would be a solution. If you have a buyer and need to pay back-payments prior to selling that would be a solution. These would be good examples of how AER could help," said Scott.
In 2005, AER provided a total of $44 million in assistance; but in 2008, they provided a total of $82.9 million in no-interest loans. The increase is mostly due to the economy, said Scott.
The unique situation of the Soldier has not been overlooked by the president and Congress. The new economic stimulus package has included provisions to address servicemembers facing losses in the housing market. The American Recovery and Reinvestment Act of 2009 was passed by Congress Feb. 13 and signed into law Feb. 17 by President Obama.
Under the new provision, the government will cover 95 percent of the amount lost when forced to sell. The provision now applies to servicemembers who PCS more than 50 miles outside their current installation and need to sell their homes.
The stimulus package extends the Defense Department's Homeowners Assistance Program by $555 million. HAP was originally designed to assist Soldiers who face a financial loss when selling a home located in an area where real estate values have declined due to an installation closure or realignment.
The provision does have some limitations. The program only applies to servicemembers who purchased their homes before July 1, 2006 which is roughly the time when the housing market started to decline.
While housing services, AER and Congress have provided some relief and assistance, experts offer caution before entering into any housing contract.
"Pay attention to leases, work with reputable realtors and have the Staff Judge Advocate Office look over all contracts before you sign," said Walters.