Here's my quandary... I purchased a home between Port Huron, MI and SANGB about 4 years ago and now that it's time to move on, I am 40K upside down and PCS'ing to an area that has a significantly lower BAH rate. It's been on the market for both purchase and rent for the better part of a year w/ virtually zero interest. Up to this point in life I have been pretty responsible financially, (aside from this purchase) I have a small chunk in TSP that I can borrow against, that with ditty move proceeds, and advance pay I figure I will have about 6 months cash available in my rainy day fund to cover the mortgage while it sits on the market. The harsh reality is that if I can't get out from under this thing or happen to rent (at a substantial loss) to someone who chooses not to pay, foreclosure would be likely. That said, how would that affect me career wise, specifically with a Security Clearance? Following that, bankruptcy may be the only option as I would likely owe 40K-50K to the lender. Unless I am mistaken, we had a prospective MCPO-CG who was passed over for filing, because this precludes you from obtaining a TS. So, is there anything else I am missing, other consequences, NJP, etc. Is anyone else in my position or anyone who has been here???

I'm definately not in your situation, but I have heard that the CG legal offices are being flooded with people in situations just like yours. I'm not sure what they will be doing to help people out, but rest assured it is being looked into.

The way the housing market is, I'd recommend renting.....

Wray....

quote:

Originally posted by Wray:
I'm definately not in your situation, but I have heard that the CG legal offices are being flooded with people in situations just like yours. I'm not sure what they will be doing to help people out, but rest assured it is being looked into.

The way the housing market is, I'd recommend renting.....

Wray....

I appreciate the insight, touching base w/ legal is something that I had not considered. As far as renting goes, I have touched base w/ every new check in I come in contact with. Believe it or not, most of them are looking to buy. BAH is rather high, considering how poor the market is. There are so many foreclosures, you can get into a home that appraised for $300K in 2003 for half that. Most E-5 and above can afford that and I can't imagine it getting much worse, at least I sure hope it doesn't. As far as renting to a civilian, with so many people out of work it's nearly impossible to find someone w/ decent credit or employment that can be documented. Again, the back up plan is to rent, even doing so at about a $500 a month loss will allow me to keep my head above water, hopefully long enough until the economy rebounds. But again, if they decide not to pay, I'm pretty much screwed.

bootos1,

I just want to mention that BAH rates are set for rental rates in a local area, not for buying. So a poor housing market in regards to purchasing a home has no effect on the BAH rate. However, if rental rates begin to drop, then BAH rates will come down. If that happens you may get lucky and get BAH rate protection, but its not a guarantee.

TCtoOS;
Good point - but:
A) The home purchase market can affect rentals in different ways: Sometimes what is happening now causes a steep demand for rentals, which means prices go up. Sometimes, it causes a drop in demmand for rentals, which means prices drop. That said, in regard to BAH Rate protections, it IS a guarantee. Whatever BAH is on the day you report PCS is the lowest amount your BAH will be. There is no 'luck' to it. As long as you stay in the same 'box' on the chart, your rate can only go UP, never down.

BootOS1;
OK, first thing first, self reported issues normally do not have a significant impact on a clearance. 'Discovered' things usually have a great impact. So, keep your CSO informed, in writing, as issues happen!
You might want to already be talking to real estate and bankruptcy lawyers. You may not be able to claim BR to get out of paying off that loan.
Be careful also when thinking about making ditty mover proceeds to 'cover' other costs. To add to the list above, probably time also to talk to a tax attorney about implications of the short sale and other issues.
Now, I find it interesting that the numbers are what you say. Did the market drop in the $100K range, or (frankly) did you do some really stupid things with regard to the loan terms??
Anyways, do everything you can to make every attempt to satisfy your obligations! Put the spouse, kids and dogs to work.

This 'issue' is being discussed at the highest levels and we are looking at what options we can use. It is tricky, for sure. It is very hard to justify doing something to 'benifit' you, if it hurts say a person who chose better loan terms or maybe even chose to rent, or chose a house closer to what the BAH is intended to cover. If you want to continue this off-line, you know how to get a hold of me.

I'm not sure of all the legal ramifications, but have you considered looking into a "short sale"? That's basically where you get the lendger to agree to sell it at a loss. I want to say that the difference is counted as earned income on your next year's taxes.

Just a thought...

MC;
My loan is good, 30 yr fixed through USAA at 6.5%. I have not refinanced, taken out a second mortgage, or any other lines of credit. You need equity to do any of those things ... I bought in 2004 when the market was still decent, and paid market prices. In short I paid 165K, owe about 155K and have had it listed for around 150K for the better part of a year. I have foreclosures for sale in my neighborhood listed at 110K, so at this point I am down 50K. Best case. The market in MI has completely crapped the bed. I know it sounds funny, but yes the market has dropped 100K plus in many areas, but in higher price ranges. The 250K-300K range was the hardest hit.

OK - then I got a bit more sympathy for you than others. Like I said, if you want to discuss more off line, you know how to get ahold of me. Do everything you can to tighten the belt and meet your obligations. Before considering foreclosure or BR, look into all options. Some may include a short sale with a payment argeement for the short amount which still allows you to meet your obligation.

quote:

Originally posted by Mightyz90_93:
TCtoOS;
Good point - but:
A) The home purchase market can affect rentals in different ways: Sometimes what is happening now causes a steep demand for rentals, which means prices go up. Sometimes, it causes a drop in demmand for rentals, which means prices drop. That said, in regard to BAH Rate protections, it IS a guarantee. Whatever BAH is on the day you report PCS is the lowest amount your BAH will be. There is no 'luck' to it. As long as you stay in the same 'box' on the chart, your rate can only go UP, never down.

Roger that MC. I researched that a little bit more. I had the geographic rate protection that was ended in 2006 mistaken with individual rate protection. Nevertheless, I don't trust anything until it is signed into law each year under the defense bill and we get an Alcoast addressing it.

BootOS1,

I recommend speaking with your Chief. Recently, the MCPOCG sent an email to the entire Chief's network regarding this issue. EPM looks like they are willing to work with members that are in your situation. That would be where you should start your research.

AB

I was saving that one for a little while!

I heard there was an email sent out saying how you can mutual if you are stuck in a house and can't sell it. Did anyone else hear this or is it rumor?
If the email is in fact wrong, then why don't you just try a reg. mutual. Hope that helped.

It's not quite that. In EXTREME situations, when all else is exhausted, CGPC MIGHT consider accepting a volunteer from THAT unit to take the orders in a person's place. These will be HIGHLY scrutinized in every way. I would advise strongly against a person 'lobbying' someone to take their orders. It needs to be very clear that the person accepting the orders is VOLUNTEERING. Do not do anything fishy at all. Don't hint about it, don't joke about it, don't even think about it.

Whoa, you certainly have a difficult one. I say do everything you can not to foreclosure and ruin your credit. Nowadays your credit will follow you and will close and open many doors. I know this might sound harsh, but if you have to PCS, being a geo-bachelor might be an alternative. This way you can minimize your living costs at your new location (since you only need to pay for yourself) and continue to pay your mortgage until you can sell. Depending on your new job as a geo-bachelor you can work part-time job since you will have more free time. I know, being there and done that, it su%^$. Just another alternative.

Do you have dependents? For a Geo?

If so, maybe talk with your new station and see if you can't have someone to shack up with until your house sells.
Or, if they have an extra room in the barracks. I know that they will only give you one "cot" or whatnot, but in this kinda situation I think they are willing to help you out more than you think. Talk to work life as well. I wish you luck, and know how stressful this all is.
Remember, this too shall pass.

Bootos1,

The program that Master Chief is talking about worked out well for me. The message came out the day before the movers were coming to pick our HHG's. I put in the request and was approved to swap orders with another member. Our situation met the exact criteria of the email. I was transferring to a very desirable boat for most MK1's and had no problem finding volunteers to go in my place. I hated to loose the orders, but the family comes first. Our home has been on the market since Feb. and we would have taken a $700 and month paycut, while trying to pay for a house that we're not living in.

Master Chief,

I can understand the hesitation in telling everyone about the program because of the occasional dirtbag Coastie that tries to cheat the system, but I also think that ALL HANDS need to know about and have the opportunity to participate in these programs. It was a God send for us, saving me alot of money and uneeded time away from my family.

I'm really happy the Coast Guard is doing something to help with situations like this.

One is no longer taxed on short sale losses per a law that passed last year.

OS, USAA is a responsive company and may be able to help you....

Please do this....

Find and talk to a CPA concerning ways to move your money so that you can pay off the shortfall, for example ... if you have TSP money that can be moved to another IRA account, such as one that is managed by USAA. Check into the availability of self directed IRAs, those that let you manage the money yourself, and ask the CPA about ways to borrow against a self directed IRA to pay off your housing debt. You can buy property with IRAs, as well as pay off debts with them, but there are rules a CPA can tell you about concerning how to do it.

Begin talking to USAA...generally, if you have assets, and you are able to continue to make payments, a lender will not approve a short sale. What they may approve is a substitution of collateral to cover the shortfall and you would continue to make payments. As part of the short sale process you'll need to provide a summary of all your assets and liabilities that show that you cannot continue to pay. A Realtor familiar with short sales can help you prepare it. A signature loan is also another way to move your debt of the property's title. No matter what you do, you must get involved with USAA now. Don't wait until you can't make payments and the foreclosure train starts moving. The more proactive you are the better.

-- Give your Realtor/broker authorization to talk to your lender so that a BPO (broker's price opinion) can be submitted to USAA. This will ensure that your listed sales price is approved and you aren't taking a stab at it. In this area there are short sale properties listed at $300K, for example, and the price isn't approved by the lender. Those houses don't sell, go into foreclosure, and their new sales price is often bumped up significantly.

Good luck to you. Think of the $50K loss as you having just bought an Escalade you can't afford, and move on. I think USAA will work with you.

Almost forgot,

When you talk to USAA ask for the loss mitigation department.

If anyone is looking for a place in Colorado, I have a dumb a$$ brother in law that is going to "Walk away" from his house, and move back to VA... I think this is the first house he has ever purchased... He retired from the USAF out there, as a MAJOR.

At 52 or what ever he is, he still doesn't have his $hit together.. Just goes to show you officers are not always smarter...

Wray...

Did you list the home with an agent? Advertising is key. Good luck, and keep us posted.