Homeowners Assistance Program HAP for BRAC 05 Impacted Organizations

1. Homeowners Assistance Program (HAP)forBRAC 05 Impacted Organizations May 2009

2. 2 Basis for HAP Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966. Loss must be ��as the result of the actual or pending closing of a base...� Expanded HAP � no requirement to prove market decline was caused by the BRAC announcement. HAP been in existence since 1966 � to help protect the home investments of service member and civilian employee in BRAC impacted communities. ARRA HAP expansion assists BRAC 05 personnel during the home mortgage crisis. It is not intended to protect home investment, but to protect from catastrophic financial loss. HAP been in existence since 1966 � to help protect the home investments of service member and civilian employee in BRAC impacted communities. ARRA HAP expansion assists BRAC 05 personnel during the home mortgage crisis. It is not intended to protect home investment, but to protect from catastrophic financial loss.

3. 3 Home Purchase Price Cap of Expanded HAP DoD policy decision to use loan limits Cap is limit of home purchase price If home exceeds cap � not eligible for any benefits DoD policy decision to use loan limits Cap is limit of home purchase price If home exceeds cap � not eligible for any benefits

4. 4 HAP Expansion: BRAC 05 Eligibility The date is in the law � it will require the Congress to change 1 Jul 06 date: Housing market declined from peak approx 10% by the end of June 2006.The date is in the law � it will require the Congress to change 1 Jul 06 date: Housing market declined from peak approx 10% by the end of June 2006.

5. 5 HAP Expansion: BRAC 05 Eligibility (Continued)

6. 6 Tax Liability of Expanded HAP Benefits

7. 7 Benefits Foreclosure Private Sale Private Sale Augmentation Government Acquisition You will need to look at each of these carefully to see which best benefits you, considering your equity, the benefit, your tax bracket, and the taxable liability. The following example computations may assist in determining your best course of action. You will need to look at each of these carefully to see which best benefits you, considering your equity, the benefit, your tax bracket, and the taxable liability. The following example computations may assist in determining your best course of action.

8. 8 Foreclosure Assist after the foreclosure Costs may include direct cost of judicial foreclosure, expenses and enforceable liabilities according to the terms of the promissory note

9. 9 Private Sale Applicant eligible to receive the greater of: 90% of the purchase price � sale price + closing costs OR Mortgage payoff + closing costs

10. 10 Private Sale and DNRP DNRP contractor purchases homes at their current fair market value. HAP treats a DNRP purchase as a private sale � HAP offsets a portion of any loss experienced when selling in a declining market.

11. 11 Private Sale Purchase price of $200,000 X 90% = $180,000 Applicant sells house for $150,000 Mortgage payoff $130,000 Benefits to applicant (Incl. closing costs estimated $40,500 at 7%) Cash after mortgage payoff $60,500 Taxable liability (benefit amount above current value) $40,500 Mortgage is lower then 90% purchase price Employee purchases home for $200,000 Benefit = 180K � 150K = 30K + Closing costs = 7% of $150,000 = $10,500 = $40,500 Normal seller closing costs as determined by board of realtors � do not include buyers� closing costs, unless it becomes a standard practice in local community . Mortgage is lower then 90% purchase price Employee purchases home for $200,000 Benefit = 180K � 150K = 30K + Closing costs = 7% of $150,000 = $10,500 = $40,500 Normal seller closing costs as determined by board of realtors � do not include buyers� closing costs, unless it becomes a standard practice in local community .

12. 12 Private Sale Augmentation Purchase price: $200,000 X 90% = $180,000 Less sales price ($150,000) Pvt sale benefit payment ($30,000 + closing costs $ 40,500 (cc) estimated at 7%) Mortgage pay off (Incl. 2nd mortgage used for home) $225,000 Sale of home (value of home at sale) ($150,000) Greater of mortgage balance + cc, OR $ 75,000 Pvt sale benefit payment $ 40,500 Mort. payoff + closing costs (75,000+ 10,500) $ 85,500 Taxable liability $ 85,500 Cash after mortgage payoff $0 Private sale augmentation occurs when applicant cannot sell home without a loss Mortgage balance exceeds 90% of purchase price Note: greater taxable liability due to mortgage payoff � 2nd mortgage payoffPrivate sale augmentation occurs when applicant cannot sell home without a loss Mortgage balance exceeds 90% of purchase price Note: greater taxable liability due to mortgage payoff � 2nd mortgage payoff

13. 13 Government Acquisition: When not able to sell home within 120 days, and approved by three star level DOD official, applicant eligible to receive the greater of: 75% of the purchase price OR Mortgage payoff

14. 14 Government Acquisition First example: Govt acquisition greater than mortgage balance Portion of payment to applicant to be withheld for tax purposes Second: mortgage balance > 75% of purchase priceFirst example: Govt acquisition greater than mortgage balance Portion of payment to applicant to be withheld for tax purposes Second: mortgage balance > 75% of purchase price

15. 15 Applicant Processing Applicants submit application packet. Required documents include: Form HUD-1 � Proof of home purchase price. Proof of ownership - copy of deed with recording information. Proof of occupancy prior to 1 July 2006 (e.g., utility bill). Proof of program eligibility: assignment to BRAC 05 impacted organization/installation and position relocated or eliminated and copy of PCS orders.

16. 16 HAP Centers of Expertise

17. 17