Home values have taken a nosedive for thousands of active military members, many of whom are now "underwater," meaning they owe more than the home is worth. The epidemic isn't unique to service members.
But, unlike civilians, military homeowners face the prospect of receiving new orders and suddenly having to unload an underwater home in a sagging real estate market. That can prove financially ruinous for those who serve.
A decades-old government housing assistance program expanded in 2009 has helped about 7,000 military homeowners avoid catastrophe, either by reimbursing homeowners or just buying the property outright. But demand has far outstripped the dollars allocated for the program, which doesn't technically expire until the end of September. In fact, there's already a deficit.
Congress approved $855 million, but the Defense Department has provided benefits totaling more than $1 billion, according to the Wall Street Journal. At this point, the program is in the red and stuck in neutral. It's unclear whether Congress will make available additional funding or if proceeds from the sale of those government-purchased homes can be put back into the program.
Letting your elected officials know your thoughts on the matter couldn't hurt. You can find your national and state representatives here.
Service members with a VA mortgage may still be able to find relief through what's known as a VA Compromise Sale. We devoted an entire post last summer to the VA Compromise Sale, which we'll link to below, but here's the gist: In some cases the VA can step in and pay the difference between the purchase price of your home and what you owe your mortgage lender.
There are some eligibility requirements to meet, and borrowers will have some of their VA entitlement tied up in the property. To learn more about this option, check out our VA Compromise Sale article from July.
Your Certificate of Eligibility (COE) verifies you meet the military service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.
Midway through Fiscal Year 2021, the VA loan program is on pace to blow past last year's record-setting 1.2 million loans. See which cities are seeing the most growth compared to last year.