For many military families, the prospect of moving and selling a home amid the biggest housing decline in decades is daunting, but a little-touted provision in Congress' economic recovery package could throw some a lifeline.
The stimulus package includes $555 million in aid to compensate military service members who are given orders and must sell their homes for less than market value. The Department of Defense would reimburse the individuals for up to 95 percent of the loss if the homes were purchased before July 1, 2006. The department could also elect to purchase the homes for up to 90 percent of the fair market value.
However, many families who qualify for the program are in a holding pattern until the department clarifies whether it will use the value of the home at the time of purchase or the value in today's market. The difference could mean tens of thousands of dollars in aid.
Home prices in South Hampton Roads have dropped steeply in the past year, according to Real Estate Information Network Inc. In January, the median sale price for existing homes was $194,000, down 13.7 percent from $224,900 a year ago. The median is the point at which half the prices are higher and half are lower.
At the same time, home sales have hit their lowest point since 2005. The service reported that 435 existing homes and condominiums were sold last month in South Hampton Roads. That's down 31.4 percent from December and down 36.6 percent from 686 in January 2008.
"We're doing... everything we can to address private home sale losses," Pentagon spokesman Navy C mdr. Darryn James said of the assistance. He said the defense department is reviewing the program to determine the eligibility requirements but it has set no deadline for decisions.
The legislation is an expansion of the Homeowners Assistance Program, which is administered by the Army Corps of Engineers.
It was originally created to help military personnel forced to sell their homes after a base closing. The expansion of the program to include those affected by the housing downturn would last until 2012. However, those who bought after the July 2006 deadline are not eligible.
Iris Finn, an agent for Exit Realty Professionals in Virginia Beach, said military members across the region have gotten stuck with homes after getting orders amid the slow market.
"People are excited about the program, and they're confused," said Finn, who specializes in working with military families. "They're hoping it works out in their favor."
Finn said the confusion stems from uncertainty about how much homeowners would be reimbursed and who would be eligible.
The program could allow Lorelei Redmond, whose husband is a master gunnery sergeant in the Marine s, to sell for a loss without incurring massive debt or dipping into savings. It could help the family avoid a short-sell - selling for less than they owe their lender.
The couple bought their home in Salem Village in August 2005 for $215,000. Last month, Mark Redmond received orders to a base in Twentynine Palms, Calif. The couple have until July to sell their home.
"At the end of the day, we can't afford to be sitting on a house with a mortgage while we're in California," said Lorelei Redmond, 42. "The primary reason we bought is because we had a teenager in high school and didn't want to move around. But we bought within our means, and we didn't get any of that crazy financing."
The Redmonds listed the home last month for $226,000 - with closing costs and other fees, just enough to break even. Though a few people have stopped by to look at the house, no offers.
"We wouldn't want to profit off the government here," Redmond said. "But we go at the whim of the military. So I think there should be some help just to get us out from underneath this."
The program could be less beneficial for Shawna Olson, a Navy lieutenant. Olson and her husband, who's also in the Navy, bought a Chesapeake home in June 2003 for $210,000.
As home values in the region soared, the couple refinanced to pay off other debt.
Navy orders are now sending the couple to Hawaii. The Olsons put their house on the market for $329,900 - the amount they need to break even.
Other homes in their Western Branch neighborhood are selling for nearly $100,000 less. If the defense department decides their home is worth $250,000, for example, it would still leave the Olsons in the hole for the difference.
"Selling for anything less than $10,000 below what we owe is going to be tough," said Olson, 36. "We didn't want to do anything that would adversely affect our credit."
Renting the home out didn't seem like the best option, she said, because they don't plan to return to the area. They also considered a short sale until they heard of the new program. "We're really wanting for the new package to help us," she said.
Josh Brown, (757) 446-2318, josh.brown@pilotonline.com
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Seriously!!!!!!!!!!!!!!!! 2
While we had planned on being here for at least 10 years (4 years til retirement), we had no worries about the market. Now, because of certain circumstances that cannot be avoided (father-n-law is terminal) we are looking at a humanitarian to MS to assist him in daily living. This plan would be a god sent (if we qualified for it), so before you all continue to bash on the military members please remember that though we all know moving is a big part of our lives. Sometimes even the most well thought out plans can come crashing down because of uncontrollable events in ones' life. And even military people need a home! not a house a home! One we can paint put nail holes in, landscape the yard, or whatever you want to do! These small things that most take for granted, we as (renters) cannot do to make it feel like our space.
Seriously!!!!!!!!!!!!!!!!
Ok, first off lets address how Michelle is using the word WHOM! You ma'am are making military wives sound uneducated! As for this plan, well now my husband and I do not qualify for this, however I think it is a great plan! Some revisions need to be made that is for sure. But let’s not forget those families that have not made bad decisions, just fell on hard times. My husband has been in the military for 16 years now (enlisted), I myself served proudly for 8 years. We waited to purchase our first home so as to not get into this type of situation. We had intended on making this our last base so our two oldest children could graduated from high school. When we moved to this station, we had intended on just living in base housing. Now, when we finally moved here, we had to consider the best thing for our family! That being said, the school system for the base was horrible, Scary even, Kids bringing guns to school, stealing, cursing out the teacher and such. So we had to reevaluate our plans. We looked for a good school district (if it even existed here) then we started looking for homes to rent or buy! Now we have purchased a home that in the last year has lost over 70K. While we had
This is a good thing, but I
This is a good thing, but I think they need to expend the dates. My husband I bought a house in July of 2007 and in Sept. the housing market went south. Now my husband reenlistment time is coming up again, and he is not sure what to do. Our house has lost money and we live in a town that is small and there isn't much work. We are not sure if are going to be able to sell our house. If we can not sell, My husband will end of leaving the Marine Corps after 9 yrs of service when he doesn't want to.
I'm curious where you find
I'm curious where you find out more information on the plan for military families selling their homes. Is there a site or did you inquire where you are stationed. Many Thanks!!!!
ya'll make me sick talking
ya'll make me sick talking like that about the military families..i do understand where some of ya'll are coming from but at the same time, pls dont knock all of us. and yes i bought my house in 2005 and yes ill be using that plan so me and hubby can come out str8 when we sell our home..our man and woman that are serving this country desorve more than that, so pls stop the BS...
SPECULATING is SPECULATING....
We're retired Navy of over 22 years service: this blatant whining by present active duty people is unrealistic and unbecoming. There is no "right" to own a home during your 3 or 4 year tours. BHA is a TAX-FREE allowance for RENT--to PROTECT service people from the vagaries of local RE markets-- to help them rent instead of having to buy (& get stuck with losses) on a home that might go down in value. That some people perverted the intent of BHA, & used it to buy instead, is not the taxpayer's fault. That $1200 BHA per month is a already a $14,400 annual taxfree taxpayer subsidy that was DESIGNED to insulate you from the risks of buying.
What gall the people in this article have! Waiting for a SECOND taxpayer subsidy now, a bailout to cover their losses from the bad bet they placed. Let's call that what it is-- speculating. Makes no difference if you're in a uniform when you do it-- you're still a speculator, who gambled on future profits. You lost, & now you want to leech off others. For shame. Do you expect us to pay your losses in Vegas, too?
Super Judgemental
In response to michelleleigh and others who have criticized or been judgemental about my situation: I am Shawna Olson and I think my family has earned the right to sell my house for a fair price. My hubby and I have served honorably for over 15 yrs and were forced to do this overseas tour b/c there are no other orders for us. In addition to this he is going to Iraq to once again serve honorably. As far as I am concerned we put our life on the line for this country and for you. We wanted to stay in our home, but couldn't. These are 4 year orders and we will be looking at retirement with 2 kids in college by the time the tour is up. We would have sold the house at that time anyway. Unfortunately we HAVE to leave. It is not the ideal situation, but this is the reality. I am not looking for a bailout, I want what my home is worth and I think we deserve it given the honorable service that we have done. I would think twice before you go around trashing veterans; it only makes you look pitiful.
BAH
For those of you that are too ignorant to look up BAH before you rant and rave - it is part of the military members pay - they are not paid well as it is, without this amount how could they even live? And you think it's sooo much - well for a family of 4 living in VA it is $1200/month! woopty wow.... If you think the military has so many perks - please, get up off your butt, leave your family for nine months and go to Iraq so some of the "overpaid" people who have been gone since last summer and missed Thanksgiving, Christmas, New Year's, Valenines Day, and birthdays with their families can come home. Please, go dedicate your life (and your entire families life) and earn ALL those perks! See if getting $1200 a month is such a big deal then! This of course is if you are E-5 or below and you come home with less than $4000/gross anyway (including your whopping $1200) ooooooooooohhhh and if you are really dedicated you can spend 22 years of your life just to retire and receive a whole $1500/month the rest of your life. Wow - now, you'll almost have enough to live in a half way decent neighborhood after 22 years!
Bailing out the Military Family
That's ok don't help the military families. What will happen is we will have to go back to the draft and I'm sure everyone will enjoy that.
WOW People!!!!!
There seems to be a lot of agreement and dissagreement going on regarding the $555 billion dollar bail-out for military personnel on orders.
Michelle: You need to get a life. I realy don't think you know what your talking about at all. You have been putting your money in to someone elses pocket all along and now that there is a plan to help SOME people out, your against it. Why, because it will not BENEFIT you! In one of your replis you wrote that if $$$ was being handed out, add you to the list. I know you would be right there with us, should you be in our situation. The plan covers only those who bought July 1, 2006 and before. The plan does not cover all of the loss but some. Get your info. correct please.
Sour Grapes
I am seeing a lot of sour grapes here. My husband is retired Navy...the only time we didn't own our own home was in Hawaii, when we were early 20's newlyweds and where it was totally impractical. We always bought within our means and rented out our home or sold as appropriate at the time. As a result, we have (by today's standards) a very low mortgage payment and plenty of equity in our home...and he was able to go to an advanced professional school for 4 years to start career #2.
Young people need to plan for the future. Renting is money is someone else's pocket. 20 years goes by real fast.
And, keep in mind that not ALL benefits provided to the military are beneficial to EVERYONE...keep crying and the next benefit that's cut might be the one YOU need
Good golly....
...folks, enough with the complaints already!!! I am in the military and own a house that I don't even live in right now because I am stationed somewhere else, I am not covered under this benefit but I am not crying or whining about it (I know what I got myself into when I joined), life is just not fair and I knew that ever since I was a child, if you all realize that maybe your life will be better. This is just one benefit about being in the military, well some because not everyone is covered and along with all the benefits in the military, it's not just meant to be for everyone. THe stimulus covers all kinds of people and all kinds of program and I am sure that there are always people that are going to be left outbut like I said, life is just not fair.
what a brilliant scam this could be
sailor b buys a house for 100k less than market value sailor a gets 95k refund from the govt. stir and repeat. nope no way to abuse this little perk...
Continued
And as far as the plan the FBI or CIA does for relocation expenses that is like comparing apples to oranges. You are in the military - not the CIA or FBI. If you want their benefits then switch employers. You or your spouse knew EXACTLY what benefits you would earn through the military. For those whom have chosen to go this route with the housing stimulus, just know you are a part of this whole problem. Stop trying to justify yourselves. For those in the military whom have had no problem paying for their homes - this is not a rant against you. I only have beef with those whom will use this program.
And I'm not saying that
And I'm not saying that members in the military should not own a home. If you can afford it, than by all means. But don't get on some program that is going to help pay off the balance of a home you have to undersell. That is not fair. I don't have a home to sell. My neighbor does. If my neighbor is the same rate as my husband and has been in the same time, then yes, the neighbor recieves a huge paycheck compared to my husband, when he has to undersell his home to move to a new location. I do not find this one bit fair or right.
I'm not saying you have to rent only, but that is what the government BAH covers - for rent. Yes, a few years ago, it was cheaper to buy than to rent in some areas of Hampton Roads, but those individuals in the military whom are trying to sell now and will take a huge loss, should have had some foresight, should have asked themselves - "Hmm, wonder how the market will play out in a few years?"
Just don't ask the taxpayers to bail you out b/c you have to move. And as far as the plan the FBI or CIA does for relocation expenses that is like comparing apples to oranges. You are in the military - not the CIA or FBI. If you want their benefits then switch
Thank you corey - might
Thank you corey - might point exactly. There is no need for the government to cover the gambling ideals of some military members when it comes to buying homes they know they will only occupy for 2 to 4 years. Especially those members who were at the time on the same ideals as HGTV and flipping homes to make a profit. I'm sorry, but if you choose the life of the military 8 times out of 10 you will forever be a nomad. And if you choose to buy a home, you must understand you are responsible for either selling that home or renting it out when its time to relocate. I'm sorry, but even the military must have some responsibility. Do I say its okay for the rest of America to be bailed out of their homes as well - heck no - no one should be bailed out for making bad choices. I don't want my husband's taxes going toward bailing out those who have no insight to the economics of our world. And for those who think there was no signs, think again. My husband reenlisted 2 years ago because we knew what was coming. Don't claim ignorance as an excuse.
As a career active duty
As a career active duty military member, reading this makes my blood boil. I for one will say that active duty military members are NOT underpaid. I think we are paid very well. I am sick and tired of hearing active duty members whine and complain about being underpaid, because it is simply not true. There aren't many jobs out there that will allow you the benefits and entitlements that the military has to offer. What these people fail to realize is just how much they would be paying for things they take for granted, such as health insurance.
It is simply not fair and completely out of line to ask taxpayers to help "bail" transferring members out of an obligation that the active duty member incurred. When you join the military, you know that you will have to transfer every so often. BAH is not designed to allow members to buy a house, but instead it is there for RENTING a place based on the member's paygrade and dependent status. If the active duty member CHOOSES to buy, that is their right and as such, it is the member's problem whenever it comes time to transfer. If you choose to take the gamble, then so be it, but don't come crying when it does not work out in your
Amen Jilsco
I could not have said it any better.
I am appalled at some of
I am appalled at some of these comments! Military people SHOULD be buying homes and building equity, just like anyone else looking for the American Dream!
How shortsighted are you to live in Navy Housing (or rent) for 20 years, retire, and have no equity!!!??? Don't you people realize that for most of us, the "wealth" you have built up during your working years for retirement is through home ownership?
That being said...anyone...and I mean ANYONE...who is in deep kimchi because of trying to play "flip this house" or treating their house like an ATM machine should be allowed to fall on their face. That is speculation, just like buying stock. But, good faith homeownership is a different matter....and let's not forget that civilians who transfer geographically and continue to work for the same company often get relo benefits that include assistance with selling their homes.
SUPPORT THE TROOPS NO MATTER WHAT IT COST....
For all the people who dont like the fact that the stimulus package includes $555 MILLION (little over 1/2 BILLION) in aid to compensate military service members who are given orders and must sell their homes for less than market value need to suck it up; its a small price to pay for to defense of your freedom. Think about the 45 BILLION TO CITIBANK; 160 BILLION TO AIG; 25 BILLION TO AUTO MAKERS; etc.... what returns are you; your kids or grandkids are getting for the companies for their bailout?