The DoD Homeowners Assistance Program and the VA Loan Program

DoD HAP & the VA Loan

DoD Homes for Veterans

The Department of Defense’s Homeowners Assistance Program (DoD HAP) and the VA loan program aren’t coordinated to work together in any way, but they are not mutually exclusive either. A borrower can use a VA loan program to purchase a home, then utilize the HAP when they are selling that home. In fact, the HAP can be used to mitigate or eliminate the need for the VA loan program to pay out in the event of foreclosure or short sale. We’re going to talk about what the HAP is and what it does, as well as how to know if you are eligible for HAP and how it can interact with the VA loan program.


The Homeowners Assistance Program

The Department of Defense’s website has a clear and succinct description on their website: “The Homeowners Assistance Program (HAP) is authorized by Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966, as amended. The Act authorizes the Secretary of Defense to provide financial aid to eligible military (including Coast Guard), civilian, certain overseas employees, and non-appropriated fund employee homeowners who have served or have been employed at or near military installations which the Department of Defense (DoD) has ordered to be closed or whose operations have been significantly reduced and where real estate values have declined because of the announced closure or realignment. Section 1001 of the American Recovery and Reinvestment Act of 2009 expanded the HAP authority to authorize the Secretary of Defense to provide financial aid to: 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; 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 surviving spouses of fallen warriors who move within two years of the death of such employee or member.”


Eligibility and Use Cases of HAP

At the moment, the DoD is only accepting applications from wounded, injured, or ill and surviving spouses as described in the above paragraph. If you do not fall under that category, you may be technically eligible but they will still not accept your application at this time. HAP provides benefits in three scenarios: private short sales, government acquisitions, and foreclosures. In a private short sale, the benefits amount is the difference between 95% of the home’s prior fair market value and the selling price. In other words, if the borrower has paid off 85% of the home and is selling it at the remaining loan amount (85%), then the HAP would reimburse the veteran up to 95% of the fair market value of the home, recuperating 10% of the 15% equity that the veteran had. In a government acquisition, the benefits amount is the greater of 90% of the home’s prior fair market value OR the mortgage’s payoff amount. In a foreclosure, the benefit is paid to the lien holder to let the borrower off the hook for the amount.


Working With the VA Loan

HAP_Logo_smHAP covers some of the same ground as the VA Compromise Sale, which uses your VA entitlement to pay the lender in case of a short sale or foreclosure. If you’re eligible, however, you should definitely first try to get approved for HAP, because that is free money that comes with no strings attached, while using your VA benefits for a Compromise Sale will utilize your VA entitlement, preventing you from using your VA benefits to get another VA loan. In this way, using HAP is a way to preserve your VA benefits for future use. While there is no coordination between the DoD and the VA in this regard, these programs do work this way together. If you think you might be eligible for HAP and would like to apply, you can visit the HAP website to download the application and instructions.


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