What happens when military homeowners with "underwater" mortgages - home loans that leave them owing more than their homes are worth - receive their PCS orders? The underwater mortgage crisis is especially difficult for military families.
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Are Underwater Mortgages Pulling Your Military Family Apart?

What happens when military homeowners with "underwater" mortgages - home loans that leave them owing more than their homes are worth - receive their PCS orders?

Upon receiving orders to new assignments, servicemembers find themselves leaving families behind in these "underwater" homes to avoid taking a hard hit to family finances or defaulting on their mortgages.

The underwater mortgage crisis is especially difficult for military families who must move every two to four years.

Holly Petraeus, head of the Office of Servicemember Affairs in the new Consumer Financial Protection Bureau (CFPB), said the burden of under water mortgages remains a major issue in military communities.

Many military bases are located in states hardest hit by collapse of the housing market, including California, Nevada and Florida and many military servicemembers are stuck with grossly overpriced homes, based on falling market home values.

The biggest fear for these military homeowners is permanent change-of-station orders, which leave them unable to sell their house and heartbroken to leave their families behind in the homes they cannot sell.

Assistance programs don't always help military families. Unless they are delinquent in paying mortgages, military families can't do a short sale or a loan modification.

Military homeowners are advised to not become delinquent, as those who don't pay their mortgages and lose their homes to foreclosure risk their security clearances and possibly their military careers.

For this reason, many military families make the tough decision to just leave their family in the house and go alone to the new duty station.

It's a tough choice since a permanent change-of-station move is usually three years with no guarantee they'll get orders back to where their family home.

Petraeus said she has seen "some movement" to help families with under water mortgages.

Some military families were helped when Congress voted to modify the Housing Assistance Program (HAP) which was created in the 1960s to protect military and federal civilian families whose homes dropped in values yet were forced to move due to base closures.

Fannie Mae and Freddie Mac also modified their guidelines so that a military move qualifies as hardship which allows access to mortgage assistance programs.

Treasury officials also changed criteria so some military people can qualify for incentives to conduct short sales or other alternatives to foreclosure under the Home Affordable Foreclosure Alternatives (HAFA) program. Military no longer need to show a drop in income to qualify.

Advice to military consumers can be found on the CFPB's website: www.consumerfinance.gov. You can file complaints about credit cards or mortgages online or by calling: (855) 411-CFPB (2372).


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