How To Avoid Foreclosure If You Are A Veteran

Most industry professionals (real estate agents, brokers, mortgage officers, short sale negotiatiors) are not aware of a special program designed to help active duty military, former military, disabled veterans, and Civil Service DOD employees. The program is called expaned HAP.

What is expanded HAP?

To understand expanded HAP, you must first understand what HAP itself is. HAP stands for Homeowners' Assistance Program and is granted to eligible service members, as well as federal Department of Defense civilian employees. The program was established by law and is enforced by the US Army Corps of Engineers (USACE).

It works by offering assistance to homeowners who fit the program's eligibility criteria and are suffering financially with the process of selling their VA homes as well as struggling to pay back the full amount of their Veterans Administration home loans. The program is designed to provide a way out of a mortgage that causes a financial hardship.

The economic recession has left many people without the ability to pay their mortgage payments. When eligible homeowners are forced into a short sale (when the sale proceeds amount to less than the amount still owed on the house), the USACE will subsidize both a borrower's and lender's loss on a VA loan.

Expanded HAP was put in place to help service members and their families in desperate need due to financial hardship, illnesses, injuries and even deaths while serving or as a result of military service.

The American Recovery and Reinvestment Act of 2009 (ARRA) seeks to help additional service members who encounter difficult circumstances as well as Department of Defense (DOD) employees. The new list (expanded definitions) take into account a broader range of service members as well as the current state of the economy, which avoids placing blame on service members and their families who are victims of circumstances beyond their personal control.

HAP was originally intended to provide assistance for service members during special situations such as base closures and PCS (Permanent Change of Station). This took into account the cost for service members who would have to sell their homes financed with VA loans immediately or default on their VA loan in the event of a short sale.

In this circumstance, it was understood that the short sale was beyond the service member's control. Expanded HAP takes into account ALL scenarios and ALL loan types (not just VA loans) where circumstances are beyond the service member's control, in addition to providing coverage for those who contribute to serving our country such as civilians, active duty military and surviving spouses.

For circumstances where eligible borrowers are unable to sell their VA homes, the United States government will step in and purchase the home for either 75% of the original price or the entire mortgage balance to make up the difference on the VA loan.

These cases aren't as rare as you might imagine due to the current decline of the housing industry coupled with the economic recession. One of the main differences between a regular short sale and a VA HLC HAP short sale is that the program is designed to prevent common issues when short selling a home. Unlike a standard short sale, the VA HLC HAP program allows a borrower to sell their home with no tax liability and a full payoff of the loan. This means the short sale will not be reported on the credit report.

This rule was established on November 11, 2009 and has since helped relieve many service members and their families who are struggling in the financial crisis. Expanded HAP covers all of those involved in serving and protecting our country while providing extra coverage for the serving members themselves.

What this means is that your VA HLC approved Realtor will be able to facilitate a short sale with full mortgage payoff at no cost to you. There is an added benefit in that your VA eligibility will be immediately restored allowing you to buy a new home using your $0 down VA home loan benefit.

As a unified country, we should provide extra support to these members who are dutifully serving their country and suffering financially with the rest of us due to the economic crisis. By offering assistance to military members and their families who are struggling to sell their VA homes and pay back conventional, FHA and VA loans, we are able to show our deep appreciation for their services.