If you are an Eglin Air Force Base or Hurlburt Field seller thinking about HAP, (military Homeowners Assistance Program), you may not be aware that effective February 1, the GAPS (Government Assisted Private Sale) has ended. Since we are talking “military”, there are a lot of acronyms, so I’ll start with a quick explanation. HAP is the program run by the Army Corps of Engineers that was expanded to assists U.S. military service members who have Permanent Change of Station (PCS) assignments, with “upside down mortgages” avoid foreclosure or short sale. Basically, HAP will cover the shortfall (part of mortgage balance left over after net proceeds from sale) at closing if the service member qualifies for the program.
Formerly, there were three types of HAP sales: Government Acquisition, Private Sale, and Government Assisted Private Sale (GASP). Here is a quick, simplified explanation of each:
Government Acquisition: The U.S. will buy the subject property from the qualifying service member, and simultaneously pay off the mortgage balance not covered by the sale, selling the property to the buyer the service member found (normally through his Realtor).
Private Sale: The qualifying service member sells his home and covers the mortgage shortfall himself. The U.S. will reimburse the service member some time after closing. The reimbursement calculation is simplified as: 90% of your prior fair market value (your purchase price plus costs of improvements), add 7% for closing costs, then subtract out your new purchase price and mortgage payoff, plus any buyer credits and actual closing costs. Using this private sale method, some military members can recoup more of their lost equity, dollars they have actually used for downpayment or improvements, as compared to the Government Acquisition, which will just pay off the mortgage deficit. The caveat with Private Sale, is that you would have to cover the entire shortfall at closing, then “wait” for the U.S. reimbursement check. That process can takes weeks or months.
Government Assisted Private Sale (ended): Instead of waiting for your U.S. reimbursement check after a “Private Sale”, you were paid by the Government at closing. This program has ended, effective February 1, 2012, per my contacts at HAP. In fact, my latest HAP closing on January 31, was a GAPS, and we were told any extensions to the closing date would remove the seller from the program.
So, what does this mean to you, the Eglin AFB or Hurlburt Field airman? You still have two HAP options available, Government Acquisition or Private Sale. In any event, the good news is that if you need to sell your home, and qualify for HAP, you can avoid foreclosure, short sale or VA Compromise Sale, and keep your credit score intact.
Do you have questions? Email me at [email protected]
Wendy Rulnick, Broker, Rulnick Realty, Inc.
Call toll-free 1-877-487-9639 or local 850-650-7883 ext 204
Email Wendy: [email protected]