Homeowners Assistance Program: The closing process
Part 5 in an ongoing series on the Homeowner's Assistance Program
Once a determination is made as to which benefits are most advantageous for the applicant, the closing process can finally begin. There are several noteworthy items to keep in mind at this time:
1. Prior to closing, the applicant will need to ensure that their mortgage is paid current, including interest, late charges, fees and penalties. In addition, any homeowner’s association or condominium association dues will also have to be paid current.
2. If you are a PCS eligible applicant receiving Government Acquisition Benefits:
A. You will need to have certified funds sent to your Benefits Specialist to pay for interest due on your mortgage to the time of settlement, as well as for any property taxes that may be due.
B. If your buyer has requested a home warranty, your benefits will not cover the cost of a home warranty. You will have to write a separate check to the home warranty company to cover the cost.
C. Any repairs that your buyer has requested be made to the property prior to closing will also not be covered as part of your benefits. You will either have to provide a check to the Government at the time of closing, or you will have to ensure that the repairs are made prior to closing.
D. As part of the Government Acquisition Benefits, the applicant will “sell” their property to the Government, who will in turn, on the same day, “sell” the property to the willing buyer. This results in two transactions, and if the applicant has a real estate agent, said agent’s commission will be paid as part of the second transaction (from the Government to the new purchaser).
3. Pursuant to the Unemployment Compensation Extension Act of 2009, which was signed into law in November of 2009, benefit payments under the Expanded HAP program are exempt from Federal taxes. However, there may be state tax implications, so applicants should seek financial and/or legal assistance.
4. For any applicants who had Federal taxes withheld prior to the law change in November of 2009 should receive a W-2C (Corrected Wage and Tax Statement) from the IRS.
While the housing market remains stagnate in many areas across the country, the Department of Defense is doing everything it can to assist its military families and civilian employees escape some, if not all, of the financial loss associated with selling home. While the process can be trying at times, once the settlement documents are signed and the mortgage is paid off, you will realize it was all worth it.
If you are thinking about applying, do not hesitate -- now is the time to take advantage of this program before the appropriated funds run out.