ER_405-1-12_CHAPTER_7_Change_40.pdf

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ER 405-1-12 Chapter 7 Change 40

CHAPTER 7

HOMEOWNERS ASSISTANCE PROGRAM

SECTION I. GENERAL

7-1. Purpose. This chapter sets forth the rules and procedures to be followed in the administration of the Department of Defense (DOD) Homeowners Assistance Program (HAP). The HAP is a special relief program available to eligible military and civilian employee homeowners. When a program is approved, it provides some financial assistance to these homeowners when they are not able to sell their homes under reasonable terms and conditions because an announced closure or reduction in scope of operations (hereafter referred to as closure) at a military installation so adversely affects the real estate market. HAP is neither a procurement program nor a land acquisition program. Although HAP does provide for acquisition of dwellings under certain circumstances, there is no governmental need for these properties and the government must resell them. HAP is not a claims program in an adversary sense and there is no provision for judicial review. Therefore, in order to carry out the intent of the congress, it is essential every effort be made to ensure each applicant is treated fairly and receives the maximum benefit as quickly as practicable and with minimum expenditure of time and money for administration. Reasonable doubts should be resolved in favor of the applicant.

7-2. Applicability. These procedures are applicable to Headquarters United States Army Corps of Engineers (HQUSACE), all major subordinate commanders (MSC) and district commanders having military real estate responsibilities. This program has worldwide application; however, no properties in foreign countries may be acquired except certain property located on a base or installation. HAP applies to members of the Armed Forces of the United States, Federal civilian employees and employees of a non-appropriated fund instrumentality (NAFI) who are U.S. citizens, and Coast Guard members, who meet eligibility requirements. Temporary employees and independent contractors and their employees are not eligible.

7-3. Authority. Public law 89-754. Section 1013, (80 Stat. 1255, 1290), as amended, authorizes the Secretary of Defense, under specified conditions, to acquire title to, hold, manage, and dispose of, or, in lieu thereof, to reimburse for certain losses upon private sale of, or foreclosure against, any property improved with a one- or two-family dwelling which is situated at or near a military base or installation which the DOD has, subsequent to November 1964, ordered closed in whole or in part. AR 405-16 delegates and authorizes the Chief of Engineers (COE) to administer, manage, and execute the HAP in accordance with applicable laws and regulations and further delegates authority to the COE to redelegate this authority to MSC and District Commanders and their respective Chiefs of Real Estate. Such authority has been relegated to the MSCs and Districts and their Chiefs of Real Estate.

7-4. Responsibilities.

a. Real Estate Community of Practice (CEMP-CR). The Director of Real Estate, acting for the COE, has been delegated authority and responsibility for the administration of HAP. CEMP-CR, as the central office for HAP, is responsible for supervision, interagency coordination, development of procedures, policy guidance, and acting as a congressional liaison, and is responsible for development of policy and processing of appeals forwarded from the districts and MSCs.

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b. MSCs. MSCs have been delegated the authority to perform oversight and review of district program management, and based upon that review, or in response to specific requests, to provide local policy guidance to the districts and recommend program changes to CEMP-CR. MSCs also are responsible for review of appeals that have not been resolved at district level, or forwarding those appeals to CEMP-CR, if resolution cannot be reached at MSC level.

c. Districts. Districts designated by the Director of Real Estate, and their Chiefs of Real Estate, have been delegated the authority to administer, manage and execute the HAP on behalf of all claimants in accordance with the provisions of this regulation. It is contemplated that the district will dispose of all cases, except appeal cases where applicant agreement cannot be reached. Such appeal cases will be forwarded, in turn, to the MSC and CEMP-CR for consideration, and if necessary, forwarded by CEMP- CR to the Deputy Assistant Secretary of the Army for Installations and Housing (ODASA(I&H)) for final decision.

7-5. Funding.

a. Revolving Fund Account. The following special revolving fund accounts have been established:

97x4090 – Homeowners Assistance Fund, Defense, and 97x4090.0100 – Allocation to Army. Definitive instructions and requirements are contained within Finance and Accounting regulations.

b. Appropriation, Receipts and Allocation. This fund contains money appropriated in accordance with the Military Construction Act, and receipts from the management, rental, or sale of the properties acquired. Funds required for administration of the program will be made available by DOD to the Department of the Army (DA), for reallocation to HQUSACE. Funds provided will be used for purchase or reimbursement as provided herein, and to defray expenses connected with the acquisition, management, and disposal of acquired properties, including payment of principal, interest, and mortgages or other indebtedness thereon, as well as the cost of staff services, contract services, insurance, and other indemnities.

c. Obligation of Funds. The purpose of this paragraph is to briefly outline how the requirements for commitments and obligations of funds are fulfilled for HAP. For government acquisition, funds will be committed for a period not to exceed 60 days when the government’s offer to purchase the applicant’s property is conveyed to the applicant. The obligation will occur upon receipt of the accepted offer returned by the applicant. Commitments for government purchase are valid only 60 days, the length of the offer. If the government purchase is not completed, funds are to be decommitted/deobligated under HAP and made available to fund other government acquisitions.

d. Mortgage Assumptions. If the government is assuming a mortgage, the amount of the outstanding mortgage(s) must be processed for obligation through HQUSACE Resource Management Office (CERM) after the deed is executed, but before the deed is released for recording. However, prior to this stage, verify the current available balance for mortgage assumption authority with CEMP-CR and CERM-B.

The total mortgage balance of homes assumed cannot exceed the ceiling on the district Fund Authorization Document (FAD). Mortgage assumption authority is a separate limitation on the district Finance and Accounting office and is not included in any other obligation authority. Any questions concerning mortgage assumptions should be directed to CERM-B. The obligation to complete the acquisition takes place at the time of settlement.

7-6. Provision of Information and Assistance.

a. Secretaries of the Military Departments. The Secretaries of the Military Departments and the directors of Defense Agencies are responsible for disseminating information on the program, rendering

7-3 assistance to applicants, receiving and verifying statements regarding employment, and forwarding application to the appropriate district after a program is approved. The personnel officers of other Federal agencies having custody of an applicant’s personnel records will verify statements regarding employment.

If personnel files are not readily available, documentation, e.g., permanent change of station (PCS) orders, discharge orders, SF50s, or other official documents may be used to establish eligibility.

b. Applications. Applications for Homeowners Assistance, DD Form 1607, are available on the DOD forms web site as well as the USACE HAP web site, http://hap.usace.army.mil/. The application explains HAP objective, eligibility requirements, available benefits, and procedures to be followed in seeking assistance. DD Form 1607 is used to submit essential data required to obtain assistance.

7-7. Overseas Bases. Personnel assigned or employed at or near overseas installations are eligible to receive HAP benefits. For property located off-base, one is eligible to receive private sale benefits after the property is sold. For housing located on-base, whether it is sold or not, one is entitled to receive financial compensation based upon a specific statutory formula, even though government acquisition is not an option.

SECTION II, DEFINITIONS

7-8. Definitions. Unless otherwise defined in this chapter, the following terms and phrases are defined:

a. The Act. The “Act” refers to Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754 (80 Stat. 1255, 1290), approved 3 November 1966, as amended.

b. Base Closure Action “In Part.” A base closure “in part” is defined as an action announced publicly by DOD or a proponent thereof, which involves one of the following: (1) termination of a separate and distinct mission or function at an installation, or (2) permanent relocation of a military unit from an installation, other than from an installation which includes in its basic mission the support or “homeporting” of various military units and has historically experienced repeated and sharp fluctuations in aggregate personnel strength.

c. Base Closure Action “In Whole.” A base closure “in whole” is defined as an action announced publicly by the DOD or a component thereof, which involves the complete closing of a military base of installation, or termination of all existing functions (other than caretaker functions) at an installation.

d. Closure or Reduction Action. A closure or reduction action, as contemplated by the Act, is defined as a publicly announced action by DOD or a component thereof, which involves complete or partial closure of an installation, or reduction in the scope of operations.

e. District Commander. The term “district commander” means any USACE district commander or his chief of real estate.

f. Employment Near the Installation. For otherwise eligible personnel whose place of duty is not the installation, employment or assignment within normal commuting distance of an installation will be considered to be “near” an installation.

g. Equity. The remaining interesting belonging to an applicant who has secured debt(s) with his/her dwelling, or the surplus of value which may remain after the dwelling has been disposed of for the satisfaction of such debt, or the amount or value of the dwelling above the total secured debt.

http://hap.usace.army.mil/

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h. Housing Market Area. The housing market area is a geographic area in which the supply/demand of dwelling units is in competition based on available transportation facilities, local commuting habits, and the pattern of urban development. Location of the employees’ dwellings affected by the announced action should be considered in determining the market area.

i. Installation. Installation means a base, camp, post, station, yard, center, homeport facility for any ship, or other activity under the jurisdiction of DOD. Such term does not include any facility used primarily for civil works, rivers and harbors projects, or flood control projects.

j. Liquidation. Satisfaction of the applicant’s primary mortgage and such other eligible debts secured by the applicant’s dwelling so that title is passed to the government with no money encumbrances.

k. Location of Dwelling Property “at or near” the installation. Dwellings located within the normal commuting distance of an installation will be considered to be “at or near” that installation.

l. Market Impact Zone. The market impact zone is defined as a residential district, neighborhood, or subdivision within the housing market area, or a category of dwellings by price, which is sufficiently impacted by an announced action to enable homeowners to qualify for assistance. The market impact zone should normally be a finite geographic area. Applicant dwellings which fall outside a predetermined market impact zone may be included depending on individual factors and circumstances, but may require an amendment to the original impact study. It is recognized that in many cases only a portion of a market area, or dwellings in a certain price bracket will be adversely affected by an announced action. An approved market impact zone is identified in the program approval letter.

m. Normal Commuting Distance. Normal reasonable commuting distance is to be determined from all relevant factors including, but not limited to, geography, commute patterns, demographics and availability of local transportation and will be defined in each program approval letter.

n. Public Announcement Date. The public announcement date is the date the Secretary of Defense, or the Secretary of the military department concerned notifies the Committee on Armed Services of the Senate and the Committee on National Security of the House of Representatives of the proposed closing or realignment of an installation under 10 U.S.D. 2687. It is also the date that a partial closure, which includes reduction in scope or operations, has been announced by DOD or a component thereof. In some instances, multiple announcement dates may be required due to multiple reductions in force, or DOD announcements and subsequent Base Realignment and Closure Commission recommendations. Any requests for multiple public announcement dates must be submitted to CEMP-CR for determination.

o. Realignment. Realignment includes any action which both reduces and relocates functions and personnel positions, but does not include reduction in force resulting from work-load adjustments, reduced personnel or funding levels, skill imbalances, or other similar causes.

p. Reasonable Effort to Sell. Terms, such as “reasonable effort to sell,” or similar phrases, relate to the amount of time available to the applicant (by direction of the employer or by personal choice) to sell the dwelling. Applicants should not be encumbered by a requirement to market the property beyond a reasonable time. This permissive definition of “reasonable effort to sell” is not to be construed as encouragement for private sale below apparent market value. Evidence of the applicant’s efforts to sell should include a signed statement detailing his/her efforts to sell the home privately, along with copies of receipts for advertisements placed in local newspapers or copies of listing agreements with real estate brokers. The applicant accepts the burden of demonstrating that when an offer is rejected it is because the offer was not reasonable.

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q. Reduction in the Scope of Operations. A significant reduction in the scope of operations is defined as an action publicly announced by DOD, or a component thereof. That involves the permanent elimination of military or Federal civilian personnel from the installation, but does not necessarily involve, as in the case of a closure, termination of any mission or function, permanent relocation of any military unit, or permanent closing of all or part of a physical plant. A Reduction-In-Force, as defined in AR 5-10, Reduction and Realignment actions, is a reduction in scope of operations.

r. Sale. The term “sale” means an executed exchange of title and possession of real property for consideration of determinable value. A private sale is deemed to have occurred once legal and equitable title have passed to the buyer.

s. Program Approval Letter. A program letter, prepared by CEMP-CR and submitted for approval and signature by DASA(I&H), will set forth the applicable closure date(s), market impact zone for each affected installation.

SECTION III. ECONOMIC IMPACT

7-9. Announcement of Base Closure or Realignment.

a. Initial Actions. As soon as possible after a public announcement of an installation closure or realignment within its jurisdiction, the district will send a letter to the installation commander briefly explaining HAP benefits, how a program is implemented, information the district will need from the installation, and the name of the district point of contact. The district should make follow-up telephone calls to the installation’s personnel officer and public affairs and housing offices.

b. Collection of Real Estate Market Data. The district should begin to gather and assemble real estate market data on pre-announcement market activity in the general geographic area of the potentially affected installation. Such data may be obtained from the installation housing office, board of realtors’ multiple listing service (MLS), real estate agents, real estate appraisers, mortgage brokers, tax assessors, county courthouse records, utility companies, and the internet. There is no requirement for the district to do individual appraisals until after a program is approved.

c. Record of Potential Impact. Districts will maintain files documenting potential impacts from the announcement date to the date HAP is approved or denied. The file must include documentation of the district’s actions in monitoring the market. Newspaper articles or DOD/installation press releases should be requested to help establish the actual local announcement date.

d. Preliminary Cost Estimate (PCE). Within 30 days after the announcement, a PCE will be submitted to CEMP-CR estimating the potential cost of a program at the installation (See Addendum 1, page 7-48).

e. Potential Impact Report (PIR). Within 45 days after the announcement, a PIR will be submitted to CEMP-CR estimating the announcement’s impact on the real estate market (See Addendum 2, page 7- 49). The PIR summarizes the district’s determination of program probability and results from gathering and scrutinizing data such as:

(1) Maps showing the installation and nearby towns.

(2) Populations and communities nearest the installation.

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(3) Installation population.

(4) Statistical data on real estate values in price trends for the previous years.

(5) Local realtor/appraiser estimates of the real estate market and the impact will be on the market as people begin to depart.

(6) Indicators of the communities’ economic dependence on the installation include:

(a) The installation’s total workforce population (military personnel and civilian employees as well as contractor personnel, and their families.) is at least five percent of the local communities’ population.

(b) Community businesses provide installation support, e.g., fast food, banking, laundry and dry cleaning, automobile services.

(c) Installation children attend community schools, or community children attend installation schools.

(d) The installation, as an entity providing financial income to the community, provides a substantial portion of the community’s income when compared with other business in the area. How does the installation’s payroll (including contractors supporting the installation) compare to other area employers?

(7) Summary of area demographics, e.g., major employers.

(8) Other information deemed useful and necessary.

f. Follow-on Actions.

(1) Installations without likely impact. The district will continue to monitor the markets in the areas of announced closures or realignments, updating PIR information every six months and reporting installation’s impact status to CEMP-CR annually.

(2) Installations with impact, or likely impact. When it is determined the announced action has had an adverse impact in the area, the district will prepare a Market Impact study within 90 days of the determination.

g. Market Impact Study (MIS) (See Addendum 3, page 7-50). The district will forward the MIS, along with recommendation for approval or denial of a program to CEMP-CR within 90 days of identifying market impacts which would justify a potential program. If significant impact is not shown, the MIS will be updated every six months until impact is shown, or CEMP-CR directs otherwise. The MIS must address two elements.

(1) Element 1. The data gathered must support a conclusion that affected personnel will be unable to sell their homes upon reasonable terms and conditions - a decline of at least five percent in the market value of homes in the areas where personnel affected by the announcement reside, as measured by market indicators. This conclusion will include data covering the period from two years prior to the announcement date to the present date.

(a) MLS sales prices.

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(b) Significant increase in inventory of unsold homes.

(c) Significant increase in area foreclosures, particularly Department of Veterans Affairs (VA) loans.

(d) Decrease in the number of home sales.

(e) Increase in the average number of days homes remain on the market.

(f) Number of building permits issued for new homes.

(g) Inability of affected personnel to sell their homes for amounts of existing mortgages.

(h) Rental occupancy rates.

(i) Unemployment rates.

(j) Number of new home sales.

(2) Element 2. The announced closure or realignment must have resulted in the depression of home values in the area. Although the closure or realignment may not be the only reason for the depressed market conditions, the data collected must clearly reflect a downward trend in the market resulting from the announcement.

(a) Elements indicative of an installation’s influence on a community’s real estate market include those listed in subparagraphs e.(6)(a) through (d), page 7-7.

(b) Installation personnel required to leave the area due to new assignments or jobs at other installations are affected as if the announcement caused the market decline. They are not able to stay in the area and wait-out program approval or market recovery.

(3) Adequate investigation and discussion of the above two elements will justify approval or disapproval recommendation.

(4)In addition to the above, the MIS should include:

(a) Estimated cost of a program, based upon the number of estimated homeowners and average value of homes owned by affected personnel.

(b) The normal commuting distances of affected personnel.

h. Market Impact Report (MIR). An MIR may be used to expand the area of eligibility for HAP applicants who reside outside the market impact zone of an approved MIS.

(1) Districts will determine the normal commuting distance for each installation within their purview. The normal commute may be dependent upon a number of factors, e.g., geography, commute patterns, demographics and availability of local transportation. The district chief of real estate is authorized to approve the normal commuting distance or each affected installation. Each district must provide normal the commuting distance for each active program to CEMP-CR.

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(2) Eligibility should be considered for individuals assigned and commuting on a daily basis to the affected installation, whose dwellings are outside the pre-approved market impact area, but within the normal commuting distance, if there has been at lease a five percent decline in the values of their homes since the announcement date. The decline in value will be determined by appraisals of the individual homes. An MIR may be used to approve applicant eligibility.

(3) An MIR must include a statement of the DOD announcement’s responsibility for the market’s decline shown by at least one criterion identified in the MIS and include the following:

(a) Description of the area and its boundaries.

(b) Distance from the installation.

(c) Number of affected homeowners, if known.

(4) At least one property must be appraised in the area, ordinarily it will be the property owned by the applicant initiating the MIR. The appraisal should estimate the prior fair market value of the dwelling on or immediately before the announcement date and the current fair market value.

i. Announcement of Program Approval, Denial, Extension, or Termination. The district should coordinate such announcements with the installation and appropriate congressional delegations prior to release.

SECTION IV. ELIGIBILITY

7-10. Requirements. An applicant must meet the requirements set forth below to be eligible for benefits under an approved HAP:

a. Type of Employment of Service. The applicant must be a member of the Armed Forces; a Federal civilian employee at, or a NAFI employee, who is an American citizen, at or in conjunction with, the affected installation. Temporary employees serving under a time limitation, including reservists serving less than 180-consecutive day tours (10 U.S.C. Section 101 (d)(6)(a), and private contractors and employees of private contractors are not included.

b. Place of Employment. The applicant must have been:

(1) a member of the Armed Forces assigned at or near the installation;

(2) a Federal civilian employee employed at, near, or in conjunction with the affected installation;

(3) a NAFI employee at a facility operated in conjunction with the installation, or

(4) a civilian or NAFI employee who is a U.S. citizen serving overseas at the time of the announcement, who is entitled to reemployment rights at the affected installation.

c. Time of Employment. The applicant must have been:

(1) assigned to, or employed at, near, or in connection with the installation at the time of the announcement;

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(2) transferred, or terminated as a result of a reduction-in-force, within six months prior to the public announcement;

(3) transferred from the installation or activity on an overseas tour within three years prior to the public announcement of the closure action;

(4) a member of the Armed Forces transferred from the installation within four years prior to the public announcement who, because of his/her military specialty and assignment planning, anticipated repeated assignments to the installation, or

(5) serving overseas as a Federal employee, with existing reemployment rights to the affected installation at the time of the announcement.

d. Owner-Occupant.

(1) At the time of the public announcement, or at the time of transfer or termination giving rise to eligibility, the applicant must have been either: the owner and occupant of property improved with a one- or two-family dwelling, situated within a normal commute of the affected installation; or, have vacated the owned dwelling as a result of being ordered into on-post housing within six months prior to the announcement.

(2) Spousal ownership is allowed, where either the applicant or a spouse is the fee simple owner of the property. Applicant must have been married to spouse at the time of the announcement.

(3) Where the applicant has an ownership interest with someone other than a spouse, the remaining owners must deed their interest to the applicant prior to government acquisition.

(4) Where the applicant has an ownership interest with someone other than a spouse, private sale benefits will be paid in accordance with the amount of interest the applicant has in the property.

(5) Applicants must hold fee simple title or have a contract to purchase in fee simple a qualifying residential dwelling, unless the dwelling is part of a cooperative association. Members of the Armed forces or Federal civilian employees may be considered owners of property without regard to the technical form of description by which an ownership interest is evidenced: provided, that, consistent with local practices and procedures, the applicant be shown substantially to have the rights and duties of a person with an ownership interest in the property, e.g., depending on relevant circumstances an applicant who holds title to a long-term ground lease rather than to the fee.

(6) Ownership interest in a cooperative home ownership association will be recognized under the cooperative homeownership laws of the State where the affected property is located. Ownership of a mobile home constitutes homeownership if the home is affixed to the land in accordance with local and state laws and regulations, and the underlying realty is held in fee simple, long-term lease (27.5 years or longer), or contract-to-purchase. The interest of a mere security holder, whether by mortgage, deed or trust, or other security instrument, does not constitute an ownership interest for purposes of HAP.

(7) An applicant who was the owner, but not the occupant at the time of announcement, due to temporary absence, i.e., a valid governmental purpose such as temporary duty, is considered eligible, it the applicant would have returned to the house after the temporary absence.

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(8) An applicant may meet the owner-occupancy requirement for a dwelling in the market impact zone of an approved program, while meeting the employment requirement of a different approved program, provided that the applicant commutes on a daily basis form the dwelling from which compensation is sought to the affected installation. The prior fair market value is to be determined from the public announcement date of the HAP where the dwelling is located.

e. Relocation or Financial Hardship. As a consequence of the closure an applicant must relocate because of military transfer or acceptance of employment, or be unemployed, not as a matter of personal choice, and able to demonstrate such financial hardship. Additionally, for reasons other than the closure action, one may be eligible for benefits if he/she relocates, due to transfer, reassignment or involuntary termination of employment.

(1) For purposes of satisfying the relocation requirement, the applicant must relocate because of military transfer or acceptance of employment beyond a normal commuting distance from the dwelling for which compensation is sought (See subparagraph 7-10g). The new place of residence must result in a decreased commute distance as identified in the Joint Travel Regulation (JTR). The distance from the new place residence to the new place of employment must be a shorter distance than the distance from the dwelling for which compensation is sought to the new place of employment. However, districts have the discretion to determine distances based upon local commuting patterns. (See subparagraph 7-8f).

(2) Financial Hardship. As a consequence of the closure or realignment, the applicant’s employment or service must have been terminated. The applicant need not relocate in order to be eligible under this subparagraph, but must meet the following additional requirements:

(a) As a result of such termination, the applicant must be unemployed, not by personal choice, and be able to demonstrate financial hardship, and unable to meet the mortgage payments and related expenses. Financial hardship due to unemployment in the area of the affected installation is a determination that must be made by the district. The applicant may be considered unemployed even though he/she was offered a comparable, or lower paying, position at another location beyond normal commuting distance. In support of the hardship allegation, the applicant is required to state why employment is not available or has not been accepted, the amount and frequency of all income, amount of debts, number an amount of all installment payments, including mortgage payments in arrears. When current income for the 90-day period preceding the date of application is less than current enforceable obligations against the applicant, including mortgage payments, it may be determined that unemployment and financial hardship, are required by the Act, have been established. Determination of hardship is to be based upon the relationship between income and obligations prior to and after termination of employment. Obligations incurred after termination of employment will not be include in the computations to establish hardship. The financial worth of the applicant need not be taken into account.

In making the hardship determination, doubtful cases should be resolved in favor of the applicant.

(b) Applicants requested to furnish supporting information to establish financial hardship will be given sufficient notification of the provisions of the Privacy Act of 1974.

f. Termination or Transfer. The definition of termination or transfer varies according to whether it is a consequence of the closure, or it is for reasons other than the closure. In either case, the applicant must relocate at least 50 miles from the dwelling for which compensation is sought.

(1) Personnel affected by the closure action. If the installation is closing entirely, all personnel will be affected eventually as a consequence of the closure as all positions will be terminated. If there is less than an entire closure, only certain personnel will be affected. The issue is whether one’s position has been or will be terminated because of the closure action. If this is the case, one may elect to retire or

7-11 not to reenlist; voluntarily or involuntarily resign from the position; elect to accept other employment, i.e., through normal rotation, reassignment or transfer.

(2) Personnel not affected by the closure action. If one’s position at an installation is not affected by the closure action, one may transfer, be reassigned or have their employment involuntarily terminated. This includes normal rotations and involuntary retirements, which are not a result of the announced action.

g. Employees who retire and relocate at least 50 miles from their pre-announcement dwelling will be presumed to have relocated in order to seek employment and, therefore, will be eligible for benefits.

7-11. Types of Benefits.

a. Private Sale.

(1) For dwellings privately sold, eligible applicants may be compensated for the difference between 95 percent of the appraised fair market value (FMV) or the property prior to the announcement date, and the appraised FMV of property at the time of sale, or the sales price, whichever is greater.

Closing costs are reimbursable for private sales occurring after 5 October 1994. Closing costs reimbursable under chapter 14 of Joint Travel Regulation (JTR) are eligible for reimbursement under the HAP. Payment of closing costs may be made to individuals who elect to sell their homes privately, but do not receive a cash payment under the private sale option.

(2) When the applicant has sold his/her property for less than the mortgage balance (a short sale), and the mortgagee forgives any remaining obligation, private sale benefits will be calculated in an amount not to exceed the difference between 95 percent of the appraised FMV prior to the announcement date and the total of the short sale plus the amount of the forgiven obligation. Reimbursement for closing costs will be calculated under paragraph 7-29, below. If the difference between the sales price and the remaining obligation is covered by a promissory note, payment should be made directly to the mortgagee.

If the benefit payment is not sufficient to satisfy the promissory note, the applicant must pay the difference. The mortgagee must be paid and a release of liability obtained prior to any benefit payment directly to applicants (See subparagraph 7-29 a. & b.).

(3) Effective 4 April 2008, HAP will assist eligible applicants whose mortgages are upside-down (their mortgage balances are larger than possible selling prices) and mortgagees are unwilling to agree to short sales. The Revised Private Sale Augmentation (RPSA) policy decision allows district HAP program managers to participate in private sale closings and pay-off mortgages, HAP payments will cover the difference between the private sale price and the mortgage balance, and all other normal HAP payments, e.g., closing costs. The selling prices of RPSA homes cannot be less than 55 percent of mortgage balances.

(4) Benefits available in connection with off-base overseas property are limited to private sale relief. In the case of private sale of property located on an overseas installation, the formula set forth in subparagraph b.(5) below is applicable, except that in computing benefits due, the sale price of the property will be added as a deduction under part (ii) for the formula.

(5) Where the district determines that improvements on the subject property have been destroyed or damaged by 75 percent or more by act of God, theft or vandalism, fire, flood, and/or other like casualty, after the date of the public announcement, the applicant will be entitled only to private sale benefits. The government will not purchase the applicants land. Benefits will be computed as follows:

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(a) Determine the prior fair market value (PFMV) of the land and improvements in an undamaged condition.

(b) Determine the current value of the land and improvements in an undamaged condition.

(c) Multiply the prior undamaged value, (a), by 95 percent and deduct the current value (b);

this is amount of the benefits to be paid to the applicant.

(6) Applicants will also be reimbursed for closing costs in accordance with subparagraph a.(1), above.

(7) Where the district determines that the improvements have been damaged after the announcement to the extent of 25 percent or less by acts of God, theft, etc., the applicant will be notified that he/she may elect to receive benefits on the basis of a private sale, as computed above, or sell the property to the government on the following basis: Multiply the PFMV by 75 percent and deduct the amount or percentage of damage calculated on the current value in the undamaged condition, less the amount of insurance payments received by applicant for the loss. Applicant may sell to the government for the amount of the outstanding mortgages, provided that the damages are repaired, or if insured, assignment of any insurance recovery for repairs may be made to the government.

(8) Where the district determines that improvements have been damaged after the announcement by acts of God, theft, etc., more than 25 percent but less than 75 percent, the applicant will be notified that he/she may receive benefits on the basis of a private sale, as computed above. Purchase of this property by the government will require the approval of CEMP-CR. If applicant wishes to sell property to the government, the district will prepare a disposal plan for submission to CEMP-CR.

b. Government Purchase.

(1) An eligible applicant may elect to sell the property to the government and receive, as the purchase price, an amount not to exceed 75 percent of the FMV prior to the date of the announcement, or the current total amount of outstanding mortgages, whichever is greater. Mortgages refinanced after the announcement date are accepted, if at the time of government acquisition, the balance does not exceed what it was at the time of refinancing, or what the balance was at the time of refinancing plus funds expended on home repair/improvement. Eligible applicants may also be reimbursed for mortgage interest, property insurance and taxes, from the date of application, or the date the dwelling is vacated, or the date of program approval, whichever is later, to the date of acquisition (See paragraph 7-29d).

(2) Junior mortgages or equity loans secured by the premises which are existing and current at the time of the public announcement are subject to the same limitations as primary mortgages.

(3) When the improvements are damaged, whether undiscovered or undisclosed, after determination of benefits under a government purchase, but before the closing, the purchase will be recalculated using the formulas set out in paragraphs 7-11a(4)(5)(6).

(4) Eligible owners of property located on an overseas installation who are unable to find a purchaser of the property may surrender their interest in the property to the government and be paid the following amount: 90 percent of the sum of the purchase price of the dwelling and improvements thereon, and all costs of ownership, including interest on notes, and cost of utilities, service, maintenance and insurance; less the amount equal to the total of all housing allowances received from the government during ownership and occupancy of the dwelling, plus rents or other benefits collected. However, the maximum compensation shall not exceed 90 percent of the unamortized portion of the cost of the

7-13 property, including improvements, at the time ownership is terminated, as reflected in the amortization schedule, relating to such property. The government may not acquire overseas off-post property.

(5) For refinanced mortgages refer to subparagraph 7-29g.

c. Foreclosure or Deeds in Lieu of Foreclosure.

(1) If foreclosure proceedings have commenced, an applicant may elect to receive either foreclosure benefits or private sale benefits. Foreclosure benefits may be paid directly to the applicant to reimburse for foreclosure costs paid by the applicant, or paid to third parties on the applicant’s behalf.

These costs may include direct costs of judicial foreclosure, expenses and enforceable liabilities according to the terms of the mortgage or promissory notes, and the amount of debts, if any, established against the applicant by a Federal agency for loans made, guaranteed, or insured by such agency following liquidation of the security for such loans., Any foreclosure entered into after the program approval date must have an enforceable liability in order for the applicant to receive benefits. Benefits may be paid to restore VA eligibility.

(2) Conveyance of a residence by deed in lieu of foreclosure is considered a private sale.

However, if an applicant is required to execute a promissory note as a condition precedent to acceptance of a deed in lieu of foreclosure, and foreclosure proceedings have commenced, the applicant can elect between private sale and foreclosure benefits. Outstanding judgment liens, encumbrances of a personal nature, or junior mortgages acquired after the announcement date, will not be paid.

(3) Foreclosure benefits are not available in foreign countries; however, foreclosures or a procedure to a deed-in-lieu of foreclosure may be considered a private sale and computed as such.

(4) In situations where the insuring agency indicates foreclosure is a “No Bid,” the agency does not reacquire the dwelling, but makes a partial settlement with the lien holder. It is possible that the sale of the dwelling by the lien holder will not completely satisfy the balance on the mortgage. In “No Bid” situations, a settlement with the insuring agency and the lien holder may be necessary, with a release obtained from each.

(5) If private sale benefits have not been paid, an applicant may request foreclosure assistance.

If the time period for filing has elapsed, the case will be forwarded to CEMP-CR for approval to reopen the file. If private sale benefits were paid, the beneficiary may not later apply for foreclosure benefits in the event that he/she is liable upon the purchaser’s foreclosure.

(6) The foreclosure must have commenced on or after the public announcement date. The date of commencement of foreclosure is to be determined under applicable state law.

(7) VA Compromise sales, where applicants sign promissory notes, will be treated as foreclosures for the purpose of paying benefits. The veteran and the VA agree to the sale of the property to another party at the current fair market value, as determined by a VA appraisal. VA will pay-off the mortgagee to eliminate the veteran’s obligation to the mortgagee. The difference between the sale price and the remaining obligation is covered by a promissory note. The HAP benefit will be the pay-off of the note. If VA waives payment of the promissory note, the applicant may elect to receive private sale benefits but the amount of the debt waived is added to the sale price of the property.

7-12. Property Subject to Mortgages.

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a. Grant of Release. If the applicant is due compensation for private sale losses, the district must obtain written documentation that the mortgagee has released the applicant for liability. If loan is assumed, ensure applicant is released from liability on subject property prior to benefit payment.

Applicants will be advised that private sale benefits or reimbursement for closing costs cannot be made until the mortgagee is paid-off. Documentation, such as full reconveyance or letter from the mortgagee, releasing the applicant from any liability under the mortgage is required. This is a statutory requirement for Federally insured mortgages and is a matter of policy for other mortgages.

b. VA loans. For VA loans made prior to 1 Mar 1988, the VA issues the release. For loans made on or after 1 March 1988, the mortgagee issues the release.

SECTION VI. APPLICATION PROCESSING PROCEDURES

7-13. Acceptance of Applications. The district will accept applications for HAP benefits. Application numbers may be assigned, but applications will not be processed until DASA(I&H) has approved a program for his/her installation. Potential applicants should be advised that in the early stages of a closure or realignment action, adverse housing market impact may not be evident. Indicators, such as sales prices, increased inventory and decreased sales, may be the best early indications of a market down-turn. The applicant must be advised that the government cannot acquire the property or process any application for benefits until a determination of adverse economic impact has been made and a program approved. The applicant should be further informed that the public announcement date will be used to establish eligibility, not his/her application or program approval dates.

7-14. Application Form (DD Form 1607). If the DD form 1607 does not provide all the information required to process an application, the applicant may be requested to provide supplemental information.

Whenever information is required, districts should provide applicants a copy of the Privacy Act Information Statement at Addendum 4, page 7-55.

7-15. Filing Period. Applications for HAP benefits should be presented to the appropriate district within the time frame authorized by the directive approving the program at the installation. Districts may receive late applications submitted up to six months after the approved time period with appropriate justification. MSCs may receive late applications for six months after the districts’ extended approval period with appropriate justification. Any application filed after this time must be submitted to CEMP- CR , with an explanation and justification for late filing. CEMP-CR will make acceptance determinations on an individual basis. Only CEMP-CR may disapprove late applications.

7-16. Review of Application. After determining the applicant meets the appropriate eligibility requirements in Section IV of this chapter, the district will verify the applicant’s employment.

Incomplete applications will be returned in a timely manner for proper completion.

7-18. Certified Mail. When sending official notifications to applicants, districts may use certified mail, return receipt requested, for delivery of decisions that may be disputed. Use of overnight mail is authorized for delivery of deeds, closing documents, and payments.

7-19. Withdrawn, Closed, and Reopened Applications.

a. Failure to Accept Benefit Amount. After the district advises the applicant of the benefit amount, the applicant will be given 45 days to either accept or appeal the benefit. If there is no action within the 45 day period, the application will be considered withdrawn.

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b. Applicant’s Failure to Respond to Requests for Information. Where an applicant has failed to respond after 45 days to requests for additional information, the district shall advise the applicant in writing that the application is considered withdrawn. Applicant will also be informed of the specific time limitation within which an application, or request to reopen a file, must be made.

c. Ineligibility. If it is determined that an applicant is ineligible for benefits, or that a private sale applicant is eligible under the program but is not entitled to benefits, and no appeal has been filed within 180 days from the date of delivery of written notice of such decision to the applicant’s last known address, the case will be considered closed.

d. Private Sale After Application for Government Acquisition. If the applicant elects government acquisition and then sells the dwelling privately before the government acquisition occurs, the application may be processed as a private sale, regardless of the time limitations for filing. The applicant must notify the district in writing of this decision, and furnish necessary documentation of the sale.

e. Withdrawal of Application to Pursue Private Sale. An eligible applicant may decide to withdraw his/her application to pursue private sale. They may later decide to sell the dwelling to the government as long as the request to reopen the file is made before the program expires. Requests to reopen files will be processed in accordance with paragraph 7-13 above.

f. Action Taken Following Determination of Appeal. If an appeal has been filed, the case will be considered closed once action has been taken in conformity with the final decision made on the appeal, as prescribed in the appeal procedures. See Section X.

g. Reopening Settled Cases. Applications which have been settled with benefit payments, in accordance with the Act and this regulation, will not be reopened or reviewed for the purpose of applying a different benefit formula, without the prior specific approval of CEMP-CR. Closed cased settled without benefits may be reopened, if that applicant is eligible for foreclosure benefits.

h. Reopening Withdrawn Cases. Withdrawn applications may be reopened by written request from the applicant within the time period allowed for filing applications in accordance with paragraph 7-15 above. The date the file is reopened will be considered the date of the application.

i. Long-term Leases Entered After Application. Applicants should be advised to enter only into month-to-month leases of their dwelling, after submission of an application. Otherwise the application may be inactive pending the end of the lease term. At that time, the application may be reactivated.

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