Like other people in this country, many military homeowners are currently underwater on their mortgage. This can pose a real problem when they receive orders for a permanent change of station and are required to move.
If you are a military servicemember displaced by a job-related move, you may qualify for a loan modification under the government’s Home Affordable Modification Program (HAMP), or you may qualify for another form of relief under a similar government program. Keep reading to learn more about HAMP, other programs under the federal Making Home Affordable initiative, and how they can help if you are in the military.
(If you are a military member struggling with debt or facing foreclosure, visit our Special Protections for the Military: Bankruptcy, Foreclosure & Debt Collection topic page.)
When Relocation Causes Problems for Military Homeowners
In the military, a Permanent Change of Station is the official relocation of a military servicemember and his or her family to a new duty location. This can create a difficult set of circumstances for military homeowners who are underwater (where you owe more than your home is worth). Here are some reasons why.
- You may not be able to sell your home at a price that will pay off their mortgage.
- You may not be able to rent out your home at a price that will cover the monthly mortgage payments.
- You may get a lower housing allowance at your new duty station.
- You may have trouble meeting all of your financial obligations while your spouse looks for a new job in your new location.
As a result, military homeowners who have previously had no problem making mortgage payments may be at risk of falling behind when they suddenly face paying for housing costs in two locations. Additionally, your security clearance could be at risk if you become delinquent on your mortgage.
One possible solution to this problem is to obtain a loan modification to lower the monthly payments and make the mortgage more affordable.
Loan Modifications for Military Homeowners
Unfortunately, in many cases, underwater military homeowners do not qualify for a lender’s in-house modification program because the home is no longer their primary residence.
In other cases, military homeowners may not qualify for assistance because they are current on their mortgage payments or their income has not changed. As a result, they are not considered to have a financial hardship, even though they now must pay for housing in two locations.
(Learn more about loan modifications in our Alternatives to Foreclosure area.)
While other loan modification programs may not be able to help a military homeowner, HAMP provides an option to servicemembers who are permanently displaced by a job-related move.
In 2009, the federal government unveiled the Making Home Affordable program to help homeowners stay in their houses and avoid foreclosure. One of the major components of the Making Home Affordable initiative is HAMP.
The primary objective of HAMP is to help homeowners avoid foreclosure by modifying loans to make them more sustainable for the long-term. To achieve this goal, mortgage servicers use interest rate reductions and term extensions to lower monthly payments. (A mortgage servicer is the company to which you make your mortgage payments.)
Eligibility for HAMP
Under HAMP, military homeowners who are permanently displaced by a job-related move may be considered owner-occupants when applying for the program. This means you may still be eligible for a mortgage modification under the HAMP program even if you no longer reside in your property.
To qualify for a HAMP modification, servicemembers must meet all of the following criteria.
- You are displaced due to an out-of-area job transfer such as permanent change of station orders, military deployment, out of area job transfer, or foreign service assignment.
- You were occupying the home as a principal residence immediately prior to the displacement.
- You intend to return to the home at some point in the future.
- You do not own any other single-family real estate.
To learn more about HAMP including qualification criteria and how to apply, see the Home Affordable Modification Program (HAMP).
Other Programs That May Help
If you qualify for HAMP and also have a second mortgage, you may be eligible for the Second Lien Modification Program (2MP). The 2MP program reduces the monthly payments for a second loan. (To learn about 2MP and other government programs for distressed homeowners, visit Nolo's Government Foreclosure Prevention Programs area.)
If you do not meet the criteria for HAMP, you may be eligible for another form of relief under the government’s Making Home Affordable program. For example, if you want to get rid of your home, you may qualify for a short sale or deed in lieu of foreclosure under the Home Affordable Foreclosure Alternatives (HAFA) program. (Learn more in our article What’s the Difference Between HAMP and HAFA?)
Also, military homeowners who do own other residential properties may still qualify for a HAMP modification under the program’s options for rental properties.
When Does HAMP End?
The HAMP program is set to end on December 31, 2015.
For More Information
To learn more about HAMP, visit the federal government's Making Home Affordable website at www.makinghomeaffordable.gov. You may also contact a housing expert at 888-995-HOPE (4673).
To learn about other legal protections for members of the military, visit our Special Protections for the Military: Bankruptcy, Foreclosure & Debt Collection topic page.