Like thousands of American homeowners, John and Susan, both in the Coast Guard, were slammed financially by the real estate crisis.
They saw the value of the $150,000 house they bought in Texas in March 2006 plummet, starting in 2007. This month they will sell it for $125,000, well below the $138,000 they still owe on their mortgage.
But unlike many homeowners, John and Susan can’t wait around until the housing market recovers. The Coast Guard ordered them to Texas four years ago; both must report next month to new East Coast assignments.
John and Susan, who asked that their real names not be used, are resigned to the fact that equity in their home has disappeared: $12,000 spent on their mortgage and another $9,000 in improvements to their home.
But the final insult is the prospect of having to pay their mortgage company at settlement an estimated $13,000 — the difference between what they owe on the mortgage and what the buyer will likely pay.
John and Susan thought for a time that they would need to take out a separate settlement loan like other victims of the housing market collapse. But then they read a command advisory on how Congress last year expanded the decades-old military Homeowners Assistance Program.
The government, it turns out, will pay that difference between sale price and mortgage owed for John and Susan, and already has paid a whole lot more to other military homeowners who found themselves in more distressed circumstances.
Housing assistance has existed since 1960s to help military and federal civilian families who have seen the value of their homes fall following announcements that military bases were closing. But last year Congress expanded the program dramatically to help new categories of military homeowners.
These include:
Surviving spouses of service members killed in the line of duty, or in the performance of duties during a deployments on or after Sept. 11, 2001.
Military personnel and civilian employees affected by the 2005 base realignment and closure because they bought their homes before May 13, 2005, and must sell on or before Sept. 30, 2012.
Military members who bought homes before July 1, 2006, and have been, or will be, reassigned between Feb. 1, 2006 and Sept. 30, 2010.
Full details are available online at the program’s website, hap.usace.army.mil.
Next month, John and Susan’s housing assistance caseworker will be at housing settlement with a check for $138,000 to pay off their mortgage. The new owner immediately will buy the house from the government for the agreed price of roughly $125,000. Thus John and Susan will escape their burdensome mortgage with a timely $13,000 assist from Uncle Sam.
Joe Sikes, director of housing for the Office of the Secretary of Defense, said 1,360 military homeowners have been helped by the expanded assistance program. John and Susan’s predicament is modest compared to that of many military homeowners caught up in the real estate crisis. The average benefit is $120,000, nearly double the original estimate.
Congress initially set aside $555 million for the program. The money and expanded authority to use it were part of the mammoth economic stimulus act enacted in February 2009. Lawmakers added another $300 million through the fiscal 2010 defense bill.
That money, said Sikes, likely will be spent or obligated by Sept. 30 as officials work through a backlog of claims filed by several thousand service members eligible to apply retroactively for assistance.
To comment, send e-mail to milupdate@aol.com or write to Military Update, P.O. Box 231111, Centreville, VA, 20120.
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