Homeowners Assistance Program Helps Military Members Who Lost Money Due to PCS

The military’s Homeowner’s Assistance Program (HAP) has been in place for decades to help homeowners who have trouble selling their homes because of a Base Realignment and Closure (BRAC) initiative. The latest round of BRAC closures happened to coincide with the recent housing market crisis in America.

A new addition to HAP was added in 2009 as part of the American Economic Recovery Act and includes protection to members of the military who are forced to move because of a permanent change of station or PCS move and lost value on the price of their home. The new plan also covers military members who were separated from military service because they were wounded, injured, or ill. The plan also covers surviving spouses.

Both the old and new versions of the law provide some monetary relief to eligible members of the military and federal employees who suffered a financial loss on the sale of their primary residence when they were not able to sell their homes under reasonable terms or conditions.

Department of Defense Homeowners Assistance Program

There are two versions of the Homeowners Assistance Program: conventional and expanded. The conventional HAP was established by Congress in 1966. It is only available for members of the military when the services conduct a round of base closures. The HAP is a special relief program that must be approved to start, and then it provides financial assistance to homeowners who are not able to sell their homes under reasonable terms because of an announced closure that adversely affects the real estate market of a local area. The Army Corps of Engineers runs HAP on behalf of all the military branches.

The expanded HAP is exactly like the conventional version, but it has been modified recently to include wounded service members, surviving spouses of military members who are killed in combat, and other members of the military who receive permanent change of station (PCS) orders.

Who Runs the Homeowners Assistance Program?

The Department of Defense Homeowners Assistance Program (HAP) is managed by the US Army Corps of Engineers (USACE), and is only open to military members who were permanently reassigned because of a Base Realignment and Closure (BRAC) during the mortgage crisis. The following information is from the website:

The Department of Defense (DOD) is proud to offer the Homeowners Assistance Program (HAP) to eligible service members and federal civilian, including non-appropriated fund, employees. The program is authorized by law, and administered by the US Army Corps of Engineers (USACE) to assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement.

There are two main eligibility criteria:

1. There has to be an announcement of a base closing or realignment action which affects your community.
2. A determination must be made that real estate values have dropped as a direct result of the base closing or realignment announcement.

Once those criteria are met, there are additional requirements.

DoD HAP Personnel & Property Eligibility Requirements:

The Homeowners Assistance Program has recently been modified to include wounded service members, surviving spouses of military members who die while deployed, and certain other military service members who are required to move more than 50 miles because they receive permanent-change-of-station orders.

HAP Property Eligibility Requirements:

• PCS orders require relocation of more than 50 miles.
• Reassignment ordered between 1 February 2006 and 30 September 2012 (or earlier date designated by Secretary of Defense).
• Property purchased or contract to purchase signed before 1 July 2006.
• Property sold by owner between 1 July 2006 and 30 September 2012 (or earlier date designated by Secretary of Defense).
• Property was the owner’s primary residence.
• Owner has not previously received these benefit payments.

Personnel Eligible for HAP

According to the HAP website, the American Recovery and Reinvestment Act of 2009 expanded the HAP authority to authorize the Secretary of Defense to provide financial aid to the following groups of individuals:

• BRAC Impacted Personnel
• Wounded, Injured or Ill, and Surviving Spouses
• Other Eligible Personnel

BRAC Impacted Personnel

Individuals impacted by the BRAC program may be eligible. This includes both civilian employees or members of the Armed Forces who were:

• Assigned to or employed at or in connection with the installation or activity at the time of public announcement of the closure action or employed by a non-appropriated fund instrumentality operated in connection with such base or installation;
• Must have been transferred from such installation or activity, or terminated as an employee as a result of a reduction in force, within six months prior to public announcement of the closure action; or
• Must have been transferred from the installation or activity on an overseas tour within three years prior to public announcement of the closure action.

Wounded, Injured or Ill, and Surviving Spouses

1) Members of the Armed Forces (30% or greater disability) who incur a wound, injury, or illness in the line of duty during a deployment in support of the Armed Forces on or after September 11, 2001;  

2) Wounded DoD and Coast Guard civilian homeowners reassigned in furtherance of medical treatment or rehabilitation or due to medical retirement in connection with a disability incurred in the performance of his or her duties during a forward deployment occurring on or after September 11, 2001, in support of the Armed Forces; and

3) Surviving spouses of fallen warriors who move within two years of the death of such employee or member.

Other Eligible Personnel:

• Personnel transferred or terminated within six months prior to the announcement who were owner-occupants at the time of transfer.
• Civilian and military personnel on overseas tours who transferred within three years prior to the announcement and who are homeowners in the area.

How to File a Department of Defense Homeowners Assistance Program claim

If you are a military member who is PCSing or has PCSed during the window of eligibility, you will need to download the application packet and complete the application, DD Form 1607, Application for Homeowners Assistance Program. The basic application is made in Part III. You will need to get your personnel officer to complete Section IV.

Supporting documents. You will also need to include verification of homeownership, the dates you lived in the home, a copy of your PCS orders, the efforts you made to sell your home and whether or not it sold, and the details of your mortgage.

You must submit your completed application by mail to the US Army Corps of Engineers district where your home is located. For more information about the district lines, visit the USACE contact page.

Is The Military Homeowner’s Assistance Program Taxable?

As mentioned above, there are two classifications of the Military Homeowners Assistance Program: homes that fall under the Conventional HAP, and the Expanded HAP.

Conventional Homeowner’s Assistance Program Is Taxable

The conventional HAP benefits payments are taxable. Members of the military owe taxes on support they receive when the support is above 95% of the prior fair market value (PFMV) of his or her home. For more information on the Conventional Homeowner’s Assistance Program, you should view the HAP website and the Army Corps of Engineers’ FAQ page.

Expanded Homeowner’s Assistance Program Is Not Taxable

Originally, the Expanded Homeowner’s Assistance Program and specifically the PCS clause was not tax-exempt. President Obama signed HR 3548 which is the Unemployment Compensation Extension Act of 2009. He signed the bill into law which also included a new exception for Expanded HAP benefit payments from federal taxes. Payments to military members are also not subject to social security or Medicare taxes.

Although HAP is exempt from Federal taxes, there may be state taxes that military members may have to pay. Applicants who had taxes withheld prior to the President signing the law change should receive a W2c which is a corrected Wage and Tax Statement from the Internal Revenue Service.

Check with Your Tax Professional for Further Clarification

As with any complicated tax situation, HAP applicants should seek legal and tax assistance if there are any specific questions about the tax implications of HAP benefit payments. HAP is a viable option for members of the Armed Forces who have had trouble selling their homes during the housing crisis or any other BRAC situation.

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