Fighting for Their Homes

Right now the program is open to military homeowners who purchased their homes before July 1, 2006, and received or will receive transfer orders between Feb. 1, 2006, through Dec. 31, 2009. That leaves Ortega in the lurch since he purchased his home a year too late to qualify for the temporary HAP funding. Asked how the date was determined, the same government official responded, "Some government agency determined that's when the downturn in the housing market began." He added, "Even if someone is not eligible now, that doesn't mean that it couldn't be changed later to make more funding available."

Delaware-based Realtor Theresa Garcia is brokering Ortega's short sale. In the last six months about 60 percent of her clients (most of them military personnel living in the Dover area) have also gone the short-sale route. "It's taking banks longer and longer to get through the short-sale process, sometimes five or six months," she says. "My clients who bought at the height of the market in 2006 and 2007 are now selling at the lowest point."

Statewide sales in Delaware have declined 10 percent in the first quarter of 2009 compared with 2008, according to the National Association of Realtors. Garcia says that home prices had stayed stable in her area, but they've begun to depreciate since earlier this year.

She adds that the military families have been slammed particularly hard and that they're hopeful that the temporary HAP funding can alleviate some of the financial burden. But with little public information about when the money is coming and for whom it will benefit, homeowners are angry about the delay. "Yes, there is a sense of frustration," Garcia says. Ortega is resentful about what he calls "an arbitrary" cutoff date that may benefit some but leaves 2007 buyers seemingly without recourse.

"We understand that there are some people who may question various aspects of the criteria, but we tried to consider every possible issue and made decisions based on the best information available," says the government official.

Those assurances aren't helping Garcia's clients right now. A recent client who got his order of transfer had to pay $10,000 in closing costs to ensure that his house would sell. Garcia says others who can't sell their homes have become long-distance landlords, often paying higher mortgage costs than the rental income they bring in.

That's been the case for naval spouse Melody Cristo. Cristo and her husband, Matthew, a Navy pilot, have been trying to sell their four-bedroom home in Chesapeake, Va., on and off since February 2007. From August 2007 to March 2009 the Cristos were long-distance landlords, charging tenants $1,800 a month while continuing to pay $2,400 on the mortgage.

After purchasing the house for $374,000 in 2005, Matthew was transferred first to Monterey, Calif., and then to Whiting Field in Milton, Fla., where the couple and their 3-year-old daughter are currently renting. In March, the Cristos heard about the HAP money being allocated to military homeowners and applied in anticipation of selling their home at a loss. Melody complains that she hasn't been able to find out any information about when the money will become available. "We haven't heard a peep from them, and time is ticking—people have bills to pay," she says.

The house is currently on the market for $369,000, but Melody admits that may still be too high, even with the $40,000 of home improvements the couple added. "It's pretty bad, we don't have the luxury of staying put unless we break up the family," she says. "I hear time and again everyone is going through the exact same thing. It's stressful; we can't save for college, we can't plan ahead. We have dwindling savings. We're running out of money."

© 2009