HAP PCS Q&A
Not all Military personnel are aware of the Homeowner Assistance Program (HAP). HAP has been expanded to help service members pay off much of their mortgage loss when PCSing to a new base and the value of their property has dropped below its mortgage balance. By using HAP the service member may avoid a short sale. There are many rumors floating around about HAP. Hopefully, the following Q&A I gleaned from our conversation will help you better understand your HAP PCS options:
1. How long will it take to get HAP benefits? Two-Three months is the new improved HAP processing time from contract to closing, with your full application into HAP. Earlier this year, in the Southern California area, it was four to six months from time of application. Why so long? HAP is currently understaffed.
2. How can I get the quickest approval from HAP? The regional representative made it very clear “Do your part– send in as complete a package as possible”. The District processes PCS applications in order of completeness! Remember, you don’t need your orders to apply. Eligibility for HAP is determined a few weeks after application. (Of course, priorities are always Wounded Warriors, Surviving Spouses) Apply as soon as you know you will be getting orders.
3. Should I be concerned about the minimum marketing time on the HAP website of 120 days? If your home sells sooner than 120 days, HAP will still consider the offer if it is close to fair market value. It is important for you to get your real estate agent to do a market analysis supporting the contract price to provide to HAP. HAP wants agent assistance. If not, they use what is called an Automated Valuation Model (AVM) that is provided by a company called Core Logic. These valuations may not be as accurate as what your agent provides, and HAP is aware of that.
4. What else should I know about the calculations to determine my HAP benefit? The HAP website leaves out some very important information about the amount of your benefit. It is based not only your original purchase price, but on capital improvements you have done with receipts to show proof. For example, if you put on a new roof, installed a water heater, built a retaining wall, etc, those are considered “capital improvements”. What is not a capital improvement would be fixing a broken air conditioner, etc. Reference the IRS “Selling Your Home” publication for a guide on what a valid improvement is, HAP uses the same.
5. Will HAP pay more than the 90% reimbursement stated on their website? In reality, HAP will consider reimbursing up to 95%, per the regional rep.
6. Will HAP pay more than 7% of the contract price towards closing costs, including your real estate agent commission? In reality, HAP will reimburse 10% towards closing costs. As the HAP regional rep stated, they want service members to be competitive in the market place, so if it helps to pay a bit toward buyer’s costs, they will do so. Currently under review is a national policy on exactly what costs HAP will cover. For example, they will not pay a buyer’s homeowner insurance, but might consider paying points.
If you are a service member at Camp Pendleton, Miramar, or Navy, and are considering HAP or a short sale for your next PCS move, give me a call or email me at tom@teamolsewski.com I will be happy to fill you in on the rest of the scoop.
