Is your home still your castle?

  • Published
  • By Master Sgt. Shey Dickerson
  • 48th Fighter Wing Air Force Smart Operations for the 21st Century director
ROYAL AIR FORCE LAKENHEATH, England --  For many years real estate has been promoted as the road to riches and everybody assumes that their home will be more than just a place to live, but also a wonderful investment. For most of us, our homes are the most expensive thing we own. And of course, in our society, the type of home we occupy says something about us to others. Buying a house is considered by most a classic act of individualism. It's saying, "I've made it. This plot of land is mine." But there's a lot of pain at stake if that dream is snatched away.

Neither the Pentagon nor the Department of Veterans Affairs tracks the number of military families facing foreclosure, but according to RealtyTrac, an online marketplace for foreclosed homes, the latest data (April 2010) shows foreclosure rates in military zip codes up 10 percent from the year before. Many who bought during the housing boom and must now relocate because of new orders are faced with selling their homes at a big loss. They are finding few buyers, or even renters, particularly in the hardest hit markets. This leaves some families facing few options, to include renting at a loss, separation from their loved ones or, in some cases, foreclosure. Although military members tend to represent a more financially stable component of the U.S. economy, those who find themselves adversely affected by the market collapse, tend to be significantly impacted.

Those caught up in the mess may find themselves having difficulty in acquiring security clearances due to credit issues generated by foreclosure proceedings. Clearly the inability to obtain or the loss of a security clearance due to credit issues will call into question matters of retention. Denial of clearances will affect careers.

Where do we go from here? How do I prevent or avoid falling into a battle of trying to keep my home? And what can I do if I'm already in that battle? There are several avenues one could take which would provide differing degrees of protection, mitigation, and or recovery regardless of the status of any potential or actual foreclosure proceedings.

This issue has caught the attention of Congress, which established the Homeowners Assistance Program (HAP) that includes language to compensate servicemembers who sell their home at a loss or have been foreclosed upon because they were forced to move after a base closure, reassignment or a combat wound requiring them to be relocated near a health facility and servicemembers required to permanently relocate during the home mortgage crisis. The program also covers surviving spouses of those killed in combat. The program applies only to a servicemember's primary residence and provides assistance in four ways: reimburse you for part of your loss from selling you home, assist in paying off the mortgage from the sale, purchase you home by paying of the mortgage, or simply provide help if you default on your mortgage. Under this new program, the government will cover 95 percent of a loss if a servicemember is forced to sell. The government can also choose to acquire the title of a home by paying off the balance of a servicemember's mortgage or paying the owner up to 90 percent of the home's previous value.

The VA is an excellent source of information and guidance for anyone needing assistance including those with conventional loans. If you are currently in default on a VA loan and are contemplating refinancing to pull the numbers down to something more manageable, look into an Interest Rate Reduction Refinancing Loan (IRRRL) to get the lower monthly payments. A Special Forbearance loan may also be an option to provide additional time to make up missed payments. For those facing foreclosure, consider a VA Compromise Sale if your situation meets the requirements. The VA also offers Loss Mitigation Services via the VA website. Anyone considering a purchase should ensure that there is a VA Escape Clause written into the contract that gives the buyer the right to cancel the purchase if the Notice of Valuation states that the sale price is different than the market value. The best protection against default and foreclosure is knowing what resources are available and what actions can be taken before things get to the breaking point. Being proactive is a big plus in your favor.

The Servicemember's Civil Relief Act (formerly the Soldiers and Sailors Civil Relief Act) is another mechanism of protections that requires creditors to reduce interest rates on loans made before an individual went onto active duty, to six percent, during the entire time the member is on active duty, requires court action before a servicemember's family can be evicted from rental property for nonpayment of rent if the monthly rent is $1,200 or less, termination of a pre-service residential lease, and allowing servicemembers to maintain their state of residence for tax purposes despite military relocations to other states.

When I sit back and think about all the problems that are being highlighted today about the housing market, I think "so what?" But this is just me. If I own a home and live happily in it, do I really care that my house is under water? Whether my house is worth more or less than my mortgage, my monthly payment is still the same. The same payment, due on the same day. While it might "seem" like I lost money, I am sure I will still enjoy living in my house every day and seeing progress in paying off my 30-year fixed mortgage.
Where ever you find yourself in the housing market and foreclosure mess, remember, your castle needs to be well protected.