[Federal Register Volume 75, Number 220 (Tuesday, November 16, 2010)]
[Rules and Regulations]
[Pages 69871-69878]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-28756]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 239

[DOD-2009-OS-0090; RIN 0790-AI58]


Homeowners Assistance Program--Application Processing

AGENCY: Under Secretary of Defense for Acquisition, Technology, and 
Logistics, Office of the Deputy Under Secretary of Defense 
(Installations and Environment), DoD.

ACTION: Final rule.

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SUMMARY: This part continues to authorize the Homeowners Assistance 
Program (HAP) to financially compensate eligible military and civilian 
Federal employee homeowners when the real estate market is adversely 
affected directly related to the closure or reduction-in-scope of 
operations due to Base Realignment and Closure (BRAC).
    The American Recovery and Reinvestment Act of 2009 (ARRA) expanded 
the HAP to provide assistance to: Wounded members of the Armed Forces 
(30 percent or greater disability), surviving spouses of fallen 
warriors, and wounded Department of Defense (DoD) civilian homeowners 
reassigned in furtherance of medical treatment or rehabilitation or due 
to medical retirement in connection with their disability; Base 
Realignment and Closure (BRAC) 2005 impacted homeowners relocating 
during the mortgage crisis; and Service member homeowners undergoing 
Permanent Change of Station (PCS) moves during the mortgage crisis.

DATES: Effective Date: January 18, 2011.

FOR FURTHER INFORMATION CONTACT: Deanna Buchner, (703) 602-4353.

SUPPLEMENTARY INFORMATION: 
    The prompt implementation of the Final Rule is of critical 
importance in meeting the goals of the Department of Defense to provide 
financial stability and increase quality of life for those impacted by 
the mortgage crisis. The Department of Defense will provide financial 
assistance to offset financial losses of homeowners who need to sell 
their homes in conjunction with PCS moves, base closures, combat 
injuries, or loss of spouse in the line of duty.
    The Under Secretary of Defense for Acquisition, Technology, and 
Logistics has overall responsibility and provides oversight for this 
program through the Deputy Under Secretary of Defense for Installations 
and Environment (DUSD(I&E)). The Army, acting as the DoD Executive 
Agent for administering the HAP and Expanded HAP, uses the 
Headquarters, U.S. Army Corps of Engineers (HQUSACE), to implement the 
program.
    Comments: The Interim Final Rule was published in the Federal 
Register on September 30, 2009 (74 FR 50109-50115). In response to the 
Interim Final Rule, the DoD received 56 comments during the 90-day 
comment period. While many comments crossed several subject areas, 
generally they can be placed into three categories: Benefits, 
eligibility, or general.
    1. Benefit comments: There were 16 comments relating to benefits. 
These comments concern: benefit percentage, government acquisition, 
short sale, closing costs, and application processing.
    a. Benefit percentage. Three comments received concerning the 
restriction of 90 percent of the primary fair market value for Base 
Realignment and Closure (BRAC) 2005 and Permanent Change of Station 
(PCS)

[[Page 69872]]

applicants as opposed to the 95 percent offered in the American 
Recovery and Reinvestment Act (ARRA) legislation. Changing this 
restriction would increase program costs by at least five percent 
overall and place expanded program applicants in the same benefit 
category as those where a DoD action (closing an installation) caused 
the market decline. ARRA expansion of HAP is designed to assist 
eligible applicants from catastrophic financial loss, not protect a 
homeowner's investment in real property.
    b. Government acquisition. One comment received. The comment 
concerned providing private sale augmentation at 100 percent of 
mortgage. Private Sale Augmentation is not authorized by law.
    c. Short sale. Two comments received concerned applicants receiving 
benefits after being forgiven the outstanding mortgage by lender and 
with deficiency being subtracted from the final amount due. Changing 
the current requirement would enable an applicant to profit by 
receiving benefits for amounts forgiven by lenders. The requirement is 
further clarified in Sec.  239.5(c)(1).
    d. Closing costs. Five comments were received regarding 
clarification of what constitutes closing costs. A definition has been 
added to Sec.  239.4 (Definitions) that clarifies what is included in 
closing costs.
    e. Application processing. Five comments were received regarding 
how applications are processed and applicants subsequently notified of 
eligibility. Clarification has been added to Sec.  239.9 (Application 
Processing Procedures) to ensure applicants understand that 
applications must be mailed or otherwise delivered to the Corps of 
Engineers district office.
    2. Eligibility comments: There were 50 comments relating to 
eligibility criteria. These comments concern: BRAC 2005 purchase date, 
BRAC 2005 definition, Automated Valuation Model (AVM) methodology, 
Retiree and Reservist eligibility, Fannie Mae/Freddie Mac conforming 
loan limit, PCS purchase date, market decline, and Coast Guard 
eligibility.
    a. BRAC 2005 purchase date. Six comments received suggesting 
changing the requirement for the home to be purchased as of the BRAC 
announcement date of May 13, 2005. This requirement remains unchanged. 
While language in the ARRA gives the Secretary of Defense the 
discretion to allow ownership until July 1, 2006, the basic HAP law, 
Demonstration Cities and Metropolitan Development Act of 1966, 
established that BRAC impacted individuals should own homes prior to 
announcement dates. For example, the two conventional homeowners 
assistance programs in effect under the prior law, which are now being 
executed at Naval Air Station (NAS) Brunswick, Maine, and Fort 
Monmouth, New Jersey, require ownership by May 13, 2005.
    b. BRAC 2005 eligibility. Four comments received. One requested 
that eligibility for BRAC 2005 include those who were assigned to a 
BRAC installation but required to relocate for other than a BRAC 
action; one that recommended BRAC eligibility be expanded to include 
other Federal agency employees; one requesting BRAC eligibility include 
employees at non-BRAC sites but are affected by BRAC unit relocations; 
and one requesting a clarification of who is eligible for BRAC 2005 
assistance. Current requirement remains unchanged. BRAC eligibility 
will continue to be only for those assigned to BRAC organizations where 
their positions are eliminated or relocated.
    c. AVM methodology and process. Ten comments received expressing 
concern that the AVM does not represent current market conditions and 
requesting an explanation of the process and data behind the AVM uses 
to determine market value. The use of AVM to determine market value has 
been eliminated from the rule by no longer requiring owners to show a 
ten percent market loss.
    d. Retiree and Reservist eligibility. Three comments received; two 
requesting voluntary retirement and one requesting Reservists be 
included as eligible for benefits. The primary focus of the Expanded 
HAP is helping those members where a DoD-ordered move caused the 
financial distress experienced by homeowners. Voluntary retirement is 
not a DoD-ordered move. Involuntary retirement, however, is a DoD-
ordered move. Reservists called to active duty, who are not expected to 
move their household goods, have an option to remain in the areas where 
they live and are generally not eligible for the HAP benefit.
    e. FannieMae/FreddieMac (FM/FM) Conforming Loan Limit. Twelve 
comments received. Some comments requested that this loan limit be 
lifted as an eligibility requirement because it does not capture what 
is occurring in today's market. Other comments requested that the focus 
of this limit be placed on the loan as opposed to purchase price. Sec.  
239.6(3) has been changed to remove the requirement for the Prior Fair 
Market Value (PFMV) or qualifying mortgage to be within the FM/FM 
conforming loan limit for eligibility purposes. The Final Rule removes 
the FM/FM limit as an eligibility requirement and specifies a cap on 
benefit payments. Benefits cannot exceed an amount equal to the highest 
2009 FM/FM conforming loan limit (as amended by the ARRA of 2009), 
which is $729,750. For home purchase prices or qualifying mortgages 
that exceed this amount, the benefit calculation will use $729,750 as 
the purchase price or qualifying mortgage amount.
    f. Permanent Change of Station home purchase date. Four comments 
received requesting information on how the date was chosen and/or 
requesting that the date be changed. The requirement to have purchased 
the home prior to July 1, 2006, is based on market trends documented by 
S&P/Case-Shiller Home Price Indices, which indicates over ten percent 
market decline through the second quarter of 2006 nationwide. The July 
1, 2006, date is a statutory requirement and remains unchanged.
    g. Personal loss/Market loss requirement. Nine comments received 
that suggested the requirement to show a ten percent market loss is too 
restrictive. The need to show a ten percent county/parish/city market 
decline has been eliminated from the rule; however, the requirement to 
show a ten percent decline in individual home value remains.
    h. Coast Guard eligibility. Two comments received that expressed 
concern that because of Coast Guard PCS procedures, ending the PCS 
eligibility on December 31, 2009, unfairly excludes most Coast Guard 
applicants from qualifying for the HAP benefit. The end date for PCS 
eligibility for members of all services was extended to September 30, 
2010.
    3. General comments: Received 12 comments of a general nature in 
the following categories: tax, marketing, definition of purchase date, 
rulemaking process, and the appeal process.
    a. Tax. Four comments were received requesting that tax 
implications be explained more clearly. 26 U.S.C. 132(n) exempts HAP 
benefits from Federal tax. This change has been made in Sec.  239.5(d).
    b. Marketing. Two comments were received requesting that the 
requirement to list houses on the market prior to obtaining HAP benefit 
be lifted. It is important to retain this requirement because it helps 
establish a home's current fair market value and will reduce the number 
of homes purchased and held in the Government's inventory which would 
increase program costs significantly.

[[Page 69873]]

    c. Purchase date definition. Four comments were received requesting 
clarity on what determines a purchase date, e.g.., deed recording, 
signed contract. The Final Rule has been changed to add a definition of 
the term purchase. According to that definition, purchase occurs when 
the applicant enters into a contract for the purchase of the home or, 
in the event there is no contract for purchase, when the applicant 
closes on the property.
    d. Rulemaking process. One comment received suggesting that 
extensions to public comment period be announced by a press release. 
The Department of Defense published a notice in the Federal Register on 
November 16, 2009 (74 FR 58846) extending the public comment period by 
an additional 60-days.
    e. Appeal process. One comment received requesting information on 
appeal process. Section 239.11 (Appeals) explains the appeal process.

a. Executive Order 12866, ``Regulatory Planning and Review''

    Under Executive Order 12866, ``Regulatory Planning and Review,'' 58 
FR 51735 (Oct. 4, 1993), a ``significant regulatory action'' is subject 
to Office of Management and Budget (OMB) review and the requirements of 
Executive Order 12866. Section 3(f) of the Executive Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or may adversely affect in a material way the economy; a sector of the 
economy; productivity; competition; jobs; the environment; public 
health or safety; or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs, or the rights and obligations of 
recipients thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    This rule is an economically significant regulatory action under 
section 3(f) of Executive Order 12866 because it is expected to have an 
annual effect on the economy of more than $100 million and materially 
alter the budgetary impact of the Homeowners Assistance Program. 
Accordingly, OMB has reviewed this rule.

b. Sec. 202, Public Law 104-4, ``Unfunded Mandates Reform Act''

    It has been certified by the DUSD(I&E) that 32 CFR part 239, does 
not contain a Federal mandate that may result in expenditure by State, 
local, and tribal governments, in aggregate, or by the private sector, 
of $100 million or more in any one year.

c. Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)

    It has been certified by the DUSD(I&E) that 32 CFR part 239, is not 
subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it 
would not, if promulgated, have a significant economic impact on a 
substantial number of small entities.

d. Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 
35)

    It has been certified by the DUSD(I&E) that 32 CFR part 239, does 
impose reporting or recordkeeping requirements under the Paperwork 
Reduction Act of 1995. These requirements have been approved by the 
Office of Management and Budget under OMB Control Number 0704-0463.

e. Executive Order 13132, ``Federalism''

    It has been certified by the DUSD(I&E) that 32 CFR part 239, does 
not have federalism implications, as set forth in Executive Order 
13132. This rule does not have substantial direct effects on:
    (1) The States;
    (2) The relationship between the Federal Government and the States; 
or
    (3) The distribution of power and responsibilities among the 
various levels of Government.

List of Subjects in 32 CFR Part 239

    Government employees; Grant programs--housing and community 
development; Housing; Military personnel.

0
Accordingly, 32 CFR part 239, is revised to read as follows:

PART 239--HOMEOWNERS ASSISTANCE PROGRAM--APPLICATION PROCESSING

Sec.
239.1 Purpose.
239.2 Applicability and scope.
239.3 Policy.
239.4 Definitions.
239.5 Benefit elections.
239.6 Eligibility.
239.7 Responsibilities.
239.8 Funding.
239.9 Application processing procedures.
239.10 Management controls.
239.11 Appeals.
239.12 Tax documentation.
239.13 Program performance reviews.
239.14 On-site inspections.
239.15 List of HAP field offices.


    Authority: 42 U.S.C. 3374, as amended by Section 1001, ARRA, 
Public Law 111-5.


Sec.  239.1.  Purpose.

    This part:
    (a) Continues to authorize the Homeowners Assistance Program (HAP) 
under Section 3374 of title 42, United States Code (U.S.C.), to assist 
eligible military and civilian Federal employee homeowners when the 
real estate market is adversely affected directly related to the 
closure or reduction-in-scope of operations due to Base Realignment and 
Closure (BRAC). Additionally, in accordance with section 1001, American 
Recovery and Reinvestment Act of 2009 (ARRA), Public Law 111-5, this 
part temporarily expands authority provided in section 3374, of title 
42 U.S.C., to provide assistance to: Wounded, Injured, or Ill members 
of the Armed Forces (30 percent or greater disability), wounded 
Department of Defense (DoD) and Coast Guard civilian homeowners 
reassigned in furtherance of medical treatment or rehabilitation or due 
to medical retirement in connection with their disability, surviving 
spouses of fallen warriors, Base Realignment and Closure (BRAC) 2005 
impacted homeowners relocating during the mortgage crisis, and Service 
member homeowners undergoing Permanent Change of Station (PCS) moves 
during the mortgage crisis. This authority is referred to as ``Expanded 
HAP.''
    (b) Establishes policy, authority, and responsibilities for 
managing Expanded HAP and defines eligibility for financial assistance.
    (c) In accordance with this part, the Under Secretary of Defense 
for Acquisition, Technology, and Logistics (USD(AT&L)) has overall 
responsibility and, through the Deputy Under Secretary of Defense for 
Installations and Environment (DUSD(I&E)), provides oversight for this 
program. The Army, acting as the DoD Executive Agent for administering 
the HAP, uses the Headquarters, U.S. Army Corps of Engineers (HQUSACE) 
to implement the program.


Sec.  239.2  Applicability and scope.

    This part applies to the Office of the Secretary of Defense, the 
Military Departments (including the U.S. Coast Guard), the Chairman of 
the Joints Chiefs of Staff, the Combatant Commands, the Inspector 
General of the Department of Defense, the Defense Agencies, DoD Field 
Activities, and all other organizational entities within the Department 
of Defense (hereafter

[[Page 69874]]

referred to collectively as the ``DoD Components''). This part for 
Expanded HAP is applicable until September 30, 2012, or as otherwise 
extended by law.


Sec.  239.3  Policy.

    It is DoD policy, in implementing section 3374 of title 42, United 
States Code, as amended by section 1001 of the ARRA (Pub. L. 111-5), 
that those eligible (see section 239.6 of this part) to participate in 
the HAP and Expanded HAP are treated fairly and receive available 
benefit as quickly as practicable.


Sec.  239.4  Definitions.

    (a) Armed Forces. The Army, Navy, Air Force, Marine Corps, and 
Coast Guard (see section 101(a) of title 10, U.S.C., as stipulated in 
section 1001(p) of Public Law 111-5).
    (b) Closing costs. Sellers' closing costs typically include: loan 
payoff fees; the real estate commission; title insurance; all or part 
of transfer taxes and escrow fees, if there are any; attorney's fees 
where applicable; and other fees set by local custom. HAP pays sellers' 
closing costs that are customary for the region where the home is 
located. Applicant's realtor or lender can provide the applicant with 
the normal closing costs for his/her region. HAP will reimburse the 
seller for limited contributions made to the buyer's portion of closing 
costs, including appraisal cost and realtor fees.
    (c) Deficiency judgment. Judicial recognition of personal liability 
under applicable state law against a Service member whose property was 
foreclosed on or who otherwise passed title to another person for a 
primary residence through a sale that realized less than the full 
outstanding mortgage balance.
    (d) Deployment. Performing service in a training exercise or 
operation at a location or under circumstances that make it impossible 
or infeasible for the member to spend off-duty time in the housing in 
which the member resides when on garrison or installation duty at the 
member's permanent duty station, or home port, as the case may be.
    (e) Eligible mortgage. A mortgage secured by the primary residence 
that was incurred to acquire or improve the primary residence. For a 
mortgage refinancing the original mortgage(s) or for a mortgage 
incurred subsequent to purchasing the property, funds from the 
refinanced or subsequent mortgages must be traced to the purchase of 
the primary residence or have been used to improve the primary 
residence. Home improvements that are documented (even if not financed 
through a subsequent mortgage or line of credit) may be added to the 
purchase price of the primary residence. Funds from a refinanced or 
subsequent mortgage that were used for other purposes are not eligible 
and may not be considered. Benefits will be calculated using the amount 
of $729,750 for primary residences with an eligible mortgage that 
exceeds $729,750. The total benefit payable (excluding allowable 
closing costs) shall not exceed $729,750. The ARRA expanded HAP 
calculates PFMV as the purchase price plus improvements. Improvements 
are identified in the Internal Revenue Publication 523 (http://www.irs.gov/publications/p523/ar02.html) which outlines items 
considered home improvements and distinguishes improvements from 
repairs and maintenance.
    (f) Forward deployment. Performing service in an area where the 
Secretary of Defense or the Secretary's designee has determined that 
Service members are subject to hostile fire or imminent danger under 
section 310(a)(2) of title 37, U.S.C.
    (g) Primary residence. The one- or two-family dwelling from which 
employees or members regularly commute (or commuted) to their primary 
place of duty. Under Sec.  239.6(a) and (b) of this part, the relevant 
property for which compensation might be offered must have been the 
primary residence of the member or civilian employee at the time of the 
relevant wound, injury, or illness. The first field grade officer (or 
civilian equivalent) in the member or employee's chain of command may 
certify primary residence status.
    (h) Prior Fair Market Value (PFMV). The PFMV is the purchase price 
of the primary residence. Benefits will be calculated using the amount 
of $729,750 as the PFMV for primary residences with a PFMV that exceeds 
$729,750.
    (i) Purchase. Purchase occurs when the applicant enters into a 
contract for the purchase of the property. In the absence of a contract 
for purchase, the purchase occurs when the applicant closes on the 
property.
    (j) Reasonable effort to sell. Applicant's primary residence must 
be listed, actively marketed, and available for purchase for a minimum 
of 120 days. With regard to marketing, applicant must demonstrate that 
the asking price was within the current market value of the home as 
determined by the HQUSACE automated value model (AVM) for no less than 
30 days. It is the applicant's responsibility to explain marketing 
efforts by detailing how the asking price was gradually reduced until 
it reached the true current fair market value (e.g., maintaining a log 
containing date and asking price recorded over period of time 
indicating number of visits by prospective buyers and offers to 
purchase). If an applicant is unable to sell the primary residence, the 
HQUSACE will determine whether efforts to sell were reasonable.
    (k) Permanent Change of Station (PCS). The assignment or transfer 
of a member to a different permanent duty station (PDS), to include 
relocation to place of retirement, when retirement is mandatory, under 
a competent authorization/order that does not specify the duty as 
temporary, provide for further assignment to a new PDS, or direct the 
military service member return to the old PDS.


Sec.  239.5  Benefit elections.

    Section 3374 of title 42, U.S.C., as amended by section 1001 of the 
ARRA, Public Law 111-5, authorizes the Secretary of Defense, under 
specified conditions, to acquire title to, hold, manage, and dispose 
of, or, in lieu thereof, to reimburse for certain losses upon private 
sale of, or foreclosure against, any property improved with a one- or 
two-family dwelling owned by designated individuals.
    (a) General benefits. (1) If an applicant is unable to sell the 
primary residence after demonstrating reasonable efforts to sell (see 
Definitions, Sec.  239.4(i) of this part), the Government may purchase 
the primary residence for the greater of:
    (i) The applicable percentage (identified by applicant type in 
Sec.  239.5(a)(4) of this part) of the Prior Fair Market Value (PFMV) 
of the primary residence, or
    (ii) The total amount of the eligible mortgage(s) that remains 
outstanding; however, the benefit payable (excluding allowable closing 
costs) shall not exceed $729,750.
    (2) If an applicant sells, has sold, or otherwise has transferred 
title of the primary residence, the benefit calculation shall be the 
amount of closing costs plus an amount not to exceed the difference 
between the applicable percentage of the PFMV and the sales price.
    (3) If an applicant is foreclosed upon, the benefit will pay all 
legally enforceable liabilities directly associated with the foreclosed 
mortgage (e.g., a deficiency judgment).
    (4) Applicable percentages. (i) If an applicant is eligible under 
Sec.  239.6(a)(1) or (2) of this part, and sells the primary residence, 
the applicable percentage shall be 95 percent of the PFMV. In addition, 
closing costs incurred on the sale may be reimbursed.
    (ii) If an applicant is eligible under Sec.  239.6(a)(1) or (2) of 
this part, and is

[[Page 69875]]

unable to sell the primary residence after demonstrating reasonable 
efforts to sell, the applicable percentage shall be 90 percent of the 
PFMV. Closing costs incurred on the sale may be reimbursed.
    (iii) If an applicant is eligible under Sec.  239.6(a)(3) or (4) of 
this part and sells the primary residence, the applicable percentage 
shall be 90 percent of the PFMV. In addition, closing costs incurred on 
the sale may be reimbursed.
    (iv) If an applicant is eligible under Sec.  239.6(a)(3) or (4) of 
this part and is unable to sell the primary residence after 
demonstrating reasonable efforts to sell, the applicable percentage 
shall be 75 percent of the PFMV. As noted under paragraph (a)(1) of 
this section, however, the applicant may instead be eligible for 
payment of the eligible mortgage outstanding.
    (b) Rules applicable to all benefit calculations. (1) Prior to 
making any payment, the Government must determine that title to the 
property has been transferred or will be transferred as the result of 
making such payment. If the Government determines that making a benefit 
payment will not result in the transfer of title to the property, no 
payment will be made.
    (2) A short sale will be treated as a private sale. If an applicant 
remains personally liable for a deficiency between the outstanding 
mortgage and the sale price, the amount of this deficiency may be 
included in the benefit, provided that the total amount of the benefit 
does not exceed the difference between 90 percent of the PFMV and the 
sales price.
    (c) Payment of benefits. (1) Private sale: Where a benefit payment 
exceeds funds required to clear the mortgage and pay closing costs, the 
amount exceeding the mortgage and closing costs will be paid directly 
to the applicant. In the case of a short sale, if an applicant remains 
personally liable for a deficiency between the outstanding mortgage and 
the sale price, that deficiency shall be paid directly to the lender on 
behalf of the applicant. If the applicant was fully released from 
liability after a short sale, no benefit shall be paid to either the 
applicant or lender.
    (2) Government purchase: Benefit is paid directly to the lender in 
exchange for government possession of the property. Since the benefit 
reimburses the applicant a percentage of the applicant's purchase 
price, if the benefit exceeds the mortgage payoff amount, the applicant 
will receive a benefit payment for the difference between the mortgage 
payoff and the total benefit payment. If the applicant has a buyer for 
the home, the payment of real estate commissions when an applicant's 
mortgage exceeds the property's current fair market value (i.e., upside 
down) will be accomplished as follows:
    (i) Commission will be at the normal and customary rate for the 
area (normally six percent) on the price agreed upon by the applicant 
and the buyer and to whom the Government will then sell the home. While 
the commission payment is the responsibility of the applicant, the 
Government will make the commission payment for the applicant when the 
home is sold by the Government to the applicant's buyer contingent upon 
both the Government acquisition and Government sale contract 
transactions being completed and recorded. Commissions will be paid to 
the broker listing the property. The allocation of dollars to real 
estate agents will be the responsibility of the listing broker.
    (ii) After Government acquisition, the Government will then sell 
the property to the buyer found by the applicant.
    (iii) No other payment of fees or commissions will be made without 
the prior approval of HQUSACE.
    (3) Foreclosure: In the case of a foreclosure, benefit is paid to 
lien holder for legally enforceable liabilities.
    (d) Tax Implications. 26 U.S.C. 132(n) exempts Expanded HAP 
benefits from Federal taxes and is not subject to withholding.


Sec.  239.6  Eligibility.

    (a) Eligibility by Category. Those eligible for benefits under the 
Expanded HAP include the following categories of persons:
    (1) Wounded, Injured, or Ill. (i) Members of the Armed Forces:
    (A) Who receive a disability rating of 30% or more for an unfitting 
condition (using the Department of Veterans Affairs Schedule for 
Ratings Disabilities), or who are eligible for Service member's Group 
Life Insurance Traumatic Injury Protection Program, or whose treating 
physician (in a grade of at least captain in the Navy or Coast Guard or 
colonel in Army, Marine Corps, or Air Force) certifies that the member 
is likely, by a preponderance of the evidence, to receive a disability 
rating of 30 percent or more for an unfitting condition (using the 
Department of Veterans Affairs Schedule for Ratings Disabilities) for 
wounds, injuries, or illness incurred in the line of duty while 
deployed, on or after September 11, 2001, and
    (B) Who are reassigned in furtherance of medical treatment or 
rehabilitation, or due to retirement in connection with such 
disability, and
    (C) Who need to market the primary residence for sale due to the 
wound, injury, or illness. (For example, the need to be closer to a 
hospital or a family member caregiver or the need to find work more 
accommodating to the disability.)
    (ii) Civilian employees of DoD or the United States Coast Guard 
(excluding temporary employees or contractors, but including employees 
of non-appropriated fund instrumentalities):
    (A) Who suffer a wound, injury, or illness (not due to own 
misconduct), on or after September 11, 2001, in the performance of 
duties while forward deployed in support of the Armed Forces, whose 
treating physician provides written documentation that the individual, 
by a preponderance of the evidence, meets the criteria for a disability 
rating of 30 percent or more. As described in paragraph (a)(1) of this 
section, this documentation will be certified by a physician in the 
grade of at least captain in the Navy or Coast Guard or colonel in 
Army, Marine Corps, or Air Force.
    (B) Who relocate from their primary residence in furtherance of 
medical treatment, rehabilitation, or due to medical retirement 
resulting from the wound, injury, or illness, and
    (C) Who need to market the primary residence for sale due to the 
wound, injury, or illness. (For example, the need to be closer to a 
hospital or a family member caregiver or the need to find work more 
accommodating to the disability.)
    (2) Surviving spouse. The surviving spouse of a Service member or 
of a civilian employee:
    (i) Whose spouse dies as the result of a wound, injury, or illness 
incurred in the line of duty while deployed (or forward deployed for 
civilian employees) on or after September 11, 2001, and
    (ii) Who relocates from the member's or civilian employee's primary 
residence within two years of the death of spouse.
    (3) BRAC 2005 members and civilian employees. Members of the Armed 
Forces and civilian employees of the Department of Defense and the 
United States Coast Guard (not including temporary employees or 
contractors) and employees of non-appropriated fund instrumentalities 
meeting the assignment requirements of Sec.  239.6(b)(4)(i)(A) of this 
part and who have not previously received HAP benefit payments:
    (i) Whose position is eliminated or transferred because of the 
realignment or closure; and

[[Page 69876]]

    (ii) Who accepts employment or is required to relocate because of a 
transfer beyond the normal commuting distance from the primary 
residence (50 miles). The new residence must be within 50 miles of the 
new duty station.
    (4) Permanently reassigned members of the Armed Forces. Members who 
have not previously received HAP benefit payments and who are 
reassigned under permanent PCS orders:
    (i) Dated between February 1, 2006, and September 30, 2012 (subject 
to availability of funds),
    (ii) To a new duty station or home port outside a 50-mile radius of 
the member's former duty station or home port.
    (b) Eligibility based on economic impact, timing, price, orders, 
and submission of application. (1) Minimum economic impact. (i) BRAC 
2005 Members and Civilian Employees as well as permanently reassigned 
members of the Armed Forces whose primary residence have suffered at 
least a 10 percent personal home value loss from the date of purchase 
to date of sale. Market value of the home will be verified by the 
USACE.
    (ii) Applicants qualifying as Wounded, Injured, or Ill or as 
surviving spouse do not need to show minimum economic impact.
    (2) Timing of purchase and sale. (i) BRAC 2005 Members and Civilian 
Employees must have been the owner-occupant of their primary residence 
before May 13, 2005, the date of the BRAC 2005 announcement or have 
vacated the owned residence as a result of being ordered into on-post 
housing after November 13, 2004. An owner-occupant is someone who has 
both purchased and resides in the residence.
    (ii) Permanently reassigned members of the Armed Forces must have 
purchased their primary residence before July 1, 2006.
    (iii) Wounded, injured, or ill members and employees and Surviving 
Spouses are eligible for compensation without respect to the date of 
purchase.
    (iv) BRAC 2005 Members and Civilian employees and permanently 
reassigned members must have sold their primary residence between July 
1, 2006 and September 30, 2012.
    (3) Maximum home prior fair market value and eligible mortgage. 
When calculating benefits, both the PFMV and the eligible mortgage will 
be capped at $729,750.
    (4) Date of assignment; report date; basis for relocation. (i) Date 
of assignment, report date. (A) BRAC 2005 Members and Civilian 
Employees must have been assigned to an installation or unit identified 
for closure or realignment under the 2005 round of the Base Realignment 
and Closure Act of 1990 on May 13, 2005; transferred from such an 
installation or unit, or employment terminated as a result of a 
reduction in force, after November 13, 2004; or transferred from such 
an installation or activity on an overseas tour after May 13, 2002. 
BRAC 2005 Members transferred from such an installation or activity 
after May 13, 2005, are also eligible if, in connection with that 
transfer the member was informed of a future, programmed reassignment 
to the installation.
    (B) For initial implementation, permanently reassigned members of 
the Armed Forces must have received qualifying orders to relocate dated 
between February 1, 2006, and September 30, 2010. These dates may be 
extended to September 30, 2012, at the discretion of the DUSD(I&E) 
based on availability of funds.
    (ii) Basis for relocation: Permanently reassigned members of the 
Armed Forces who are reassigned or who otherwise relocate for the 
following reasons are not eligible for Expanded HAP benefits:
    (A) Members who voluntarily retire prior to reaching their 
mandatory retirement date.
    (B) Members who are a new accession into the Armed Forces or who 
are otherwise entering active duty.
    (C) Members who are voluntarily separated or discharged.
    (D) Members whose separation or discharge is characterized as less 
than honorable.
    (E) Members who request and receive voluntary release from active 
duty (REFRAD).
    (F) Members who are REFRAD for misconduct or poor performance.
    (c) Applications will be processed according to eligibility 
category in the following order: (1) Wounded, injured, and ill. Within 
this category, applications will generally be processed in 
chronological order of the wound, injury, or illness.
    (2) Surviving spouses. Within this category, applications will 
generally be processed in chronological order of the date of death of 
the member or employee.
    (3) BRAC 2005 members and civilian employees. Within this category, 
applications will generally be processed in chronological order of the 
date of job elimination.
    (4) Permanently reassigned members of the Armed Forces. Within this 
category, applications will generally be processed beginning with the 
earliest report-not-later-than date of PCS orders.


Sec.  239.7  Responsibilities.

    (a) The DUSD(I&E), under the authority, direction, and control of 
the USD(AT&L), shall, in relation to the Expanded HAP:
    (1) Prescribe and monitor administrative and operational policies 
and procedures.
    (2) Determine applicable personnel benefits and policies, in 
coordination with the Under Secretary of Defense (Comptroller) and the 
Under Secretary of Defense for Personnel and Readiness.
    (3) Serve as senior appeals authority for appeals submitted by 
applicants.
    (b) The Under Secretary of Defense (Comptroller) shall, in relation 
to the Expanded HAP:
    (1) Implement policies and prescribe procedures for financial 
operations.
    (2) Review and approve financial plans and budgets.
    (3) Issue financing and obligation authorities.
    (4) Administer the DoD Homeowners Assistance Fund.
    (c) The Deputy Assistant Secretary of the Army for Installations 
and Housing (DASA(I&H)), subject to review by the DUSD(I&E), as the DoD 
Executive Agent for administering, managing, and executing the HAP, 
shall:
    (1) Establish detailed policies and procedures for execution of the 
program.
    (2) Maintain necessary records, prepare reports, and conduct 
audits.
    (3) Publish regulations and forms.
    (4) Disseminate information on the program.
    (5) Forward copies of completed responses to congressional 
inquiries and appeals to the DUSD(I&E) for information.
    (6) Serve as the initial approval authority for HAP appeals. The 
DASA(I&H) may approve appeals and shall forward recommendations for 
Expanded HAP denial to the DUSD(I&E) for decision.
    (d) The Heads of the DoD Components and the Commandant of the Coast 
Guard, by agreement of the Secretary of Homeland Security, shall:
    (1) Designate at least one representative at the headquarters level 
to work with DASA(I&H) and HQUSACE HAP offices.
    (2) Require each installation to establish a liaison with the 
nearest HAP field office to obtain guidance or assistance on the HAP.
    (3) Supply the HQUSACE HAP office a copy of any internal 
regulation, instruction, or guidance published relative to the Expanded 
HAP program.
    (4) Disseminate information on the Expanded HAP and, upon request, 
supply HAP field offices with data pertaining to the Expanded HAP.

[[Page 69877]]

    (e) HQUSACE. (1) Real Estate Community of Practice (CEMP-CR). The 
Director of Real Estate, acting for the Chief of Engineers, has been 
delegated authority and responsibility for the execution of HAP. CEMP-
CR, as the central office for HAP, is responsible for the following:
    (i) Supervision, interagency coordination, development of 
procedures, policy guidance, and processing of appeals forwarded from 
the districts and HQUSACE Major Subordinate Commands (MSC).
    (ii) Maintaining an Expanded HAP central office and Expanded HAP 
field offices.
    (iii) Processing appeals from the MSC where applicant agreement 
cannot be reached. Such appeals will be forwarded, in turn, to 
DASA(I&H) for consideration.
    (2) Districts. Districts designated by the Director of Real Estate, 
and their Chiefs of Real Estate, have been delegated the authority to 
administer, manage, and execute the HAP on behalf of all applicants. 
Districts (as identified in Sec.  239.9 of this part) are responsible 
for the following:
    (i) Accepting applications (DD Form 1607) for HAP and Expanded HAP 
benefits.
    (ii) Determining the eligibility of each applicant for Expanded HAP 
assistance using the criterion established by the DUSD(I&E).
    (iii) Determining and advising each applicant on the most 
appropriate type of assistance.
    (iv) Determining amounts to be paid, consistent with DoD policy, 
and making payments or authorizing and arranging for acquisition or 
transfer of the applicant's property.
    (v) Maintaining, managing, and disposing of acquired properties or 
contracting for such services with private contractors.
    (vi) Processing all appeals, except where applicant agreement 
cannot be reached. Such appeal cases will be forwarded, in turn, to the 
MSC, CEMP-CR, and DASA(I&H) for consideration.
    (3) HQUSACE Major Subordinate Commands (MSC). MSCs have been 
delegated the authority to perform oversight and review of district 
program management and based upon that review, or in response to 
specific requests, to provide local policy guidance to the districts 
and recommend program changes or forward appeals to CEMP-CR for 
consideration.


Sec.  239.8  Funding.

    (a) Revolving fund account. The revolving fund account contains 
money appropriated in accordance with the ARRA, and receipts from the 
management, rental, or sale of the properties acquired.
    (b) Appropriation, receipts, and allocation. Funds required for 
administration of the program will be made available by DoD to the 
HQUSACE. Funds provided will be used for purchase or reimbursement as 
provided herein and to defray expenses connected with the acquisition, 
management, and disposal of acquired properties, including payment of 
mortgages or other indebtedness, as well as the cost of staff services, 
contract services, Title Insurance, and other indemnities.
    (c) Obligation of funds. For government acquisition of homes under 
the authority of this Rule, funds will be committed prior to the 
Government's offer to purchase is conveyed to the applicant. The 
obligation will occur upon timely receipt of the accepted offer 
returned by the applicant.


Sec.  239.9  Application processing procedures.

    (a) Acceptance of applications. The district will accept 
applications (DD Form 1607) for HAP and Expanded HAP benefits submitted 
through the U.S. Mail or other delivery system direct to the 
appropriate district office. See Sec.  239.15 of this part for a list 
of District field offices.
    (b) Application Form (DD Form 1607). Should the DD form 1607 not 
provide all the information required to process Expanded HAP 
applications, Districts must provide applicants appropriate 
supplemental instructions.
    (c) Assignment of application numbers. (1) Assignment of 
application numbers. When a District receives an application, it will 
assign the application number and develop and maintain an individual 
file for each property. Applications for programs located in another 
District will not be assigned a number, but will be forwarded 
immediately to the District having jurisdiction. An application number, 
once assigned, will not be reassigned regardless of the disposition of 
the original application. Reactivation or reopening of a withdrawn 
application does not require a new application or application number.
    (2) Method of assignment. An application will be numbered in the 
following manner:
    (i) Agency code. Code to indicate the Federal agency accountable 
for installation being closed or applicant support:
    (A) 1--Army
    (B) 2--Air Force
    (C) 3--Navy
    (D) 4--Marine Corps
    (E) 5--Defense Agencies
    (F) 6--Non-Defense Agencies
    (G) 7--U.S. Coast Guard
    (ii) District code.
    (A) Sacramento: L2
    (B) Savannah: K6
    (C) Fort Worth: M2
    (iii) Applicant category code (military/civilian/wounded/surviving 
spouse/PCS):
    (A) 1 = Civilian (BRAC)
    (B) 2 = Military (BRAC)
    (C) 3 = Non-appropriated Fund Instrumentalities
    (D) 4 = Military Wounded
    (E) 5 = Civilian Wounded
    (F) 6 = Surviving Spouse (military deceased)
    (G) 7 = Surviving Spouse (civilian employee deceased)
    (H) 8 = Military PCS
    (iv) State: State abbreviation.
    (v) Installation number: The five digit ZIP Code of the applicant's 
present (former, if they have already moved) installation, offices, or 
unit address. Examples are:
    (A) For a BRAC 05 applicant moving from the closing Saint Louis, 
Missouri, DFAS office to Minneapolis, Minnesota, use the ZIP Code of 
the city from which he or she is moving, e.g., 63101, for St. Louis, 
Missouri.
    (B) For wounded warrior or surviving spouse who moved from primary 
residence, use present installation or home town.
    (C) For Service members who are eligible based on PCS criteria, use 
ZIP Code of installation from which they depart.
    (vi) Application Number: Sequential beginning with 0001.

    Example 1:
    2 K6 2 NH0 3 8 0 30 0 0 1
    Air Force-SAS Dist.-Mil BRAC-NH-Pease AFB-Applicant 

    Example 2:
    1-K 6- 4- NY-1 3 6 0 2-0 0 0 2
    Army-SAS Dist-Mil Wounded-NY-Ft Drum-Applicant 

    (d) Real Estate Values. (1) Because the PFMV is the purchase price 
for Expanded HAP, no appraisal of the property is required. Supporting 
documentation to establish purchase price must be furnished by the 
applicant. Generally, Form HUD-1 will suffice.
    (2) Districts are responsible for ensuring primary residence values 
are appropriate and applicants receive deserved benefit payments. 
Districts will use the CoreLogic AVM to determine the valuation of 
individual primary residences.

[[Page 69878]]

Sec.  239.10  Management controls.

    (a) Management systems. Headquarters, USACE has an existing 
information management system that manages all information related to 
the HAP program.
    (1) HAPMIS. The Homeowners Assistance Program Management 
Information System (HAPMIS) provides program management assistance to 
field offices and indicators to managers at field offices, regional 
headquarters and HQUSACE at the Service Member level of detail. The 
Privacy Act applies to this program and the management information 
system to protect the privacy of Expanded HAP applicant information.
    (2) CEFMS. The Corps of Engineers Financial Management System 
(CEFMS) provides detailed funds execution and tracking, to include:
    (i) Funds issued to field offices for execution accountability.
    (ii) Funds committed and obligated by applicant category, 
installation, state and county.
    (b) System of Records Notice (SORN). The Privacy Act limits 
agencies to maintaining ``only such information about an individual as 
is relevant and necessary to accomplish a purpose of the agency 
required to be accomplished by statute or Executive order of the 
President.'' 5 U.S.C. 552a(e)(1). The SORN for the Homeowners 
Assistance Program can be found at http://www.defenselink.mil/privacy/notices/army/A0405-10q_CE.shtml. The Privacy Impact Assessment for the 
system can be reviewed at: http://www.army.mil/ciog6/privacy.html. 
Individuals seeking to determine whether information about them is 
contained in this system should address written inquiries to the Chief 
of Engineers, Headquarters U.S. Army Corps of Engineers, Attn: CERE-R, 
441 G Street, NW., Washington, DC 20314-1000.


Sec.  239.11  Appeals.

    Applicant appeals will be processed at the district level and 
forwarded through HQUSACE for review. The HQUSACE may approve an appeal 
but must forward any recommendation for denial to the DASA(I&H) for 
review and consideration. DASA(I&H) may approve an appeal but must 
forward recommendations for denial to the DUSD(I&E) for decision. The 
DUSD(I&E) is the senior appeals authority for appeals submitted by 
applicants.


Sec.  239.12  Tax documentation.

    For disbursed funds, tax documents (if necessary) will be certified 
by HQUSACE Finance Center and distributed to applicants and the 
Internal Revenue Service (IRS) annually.


Sec.  239.13  Program performance reviews.

    HQUSACE will prepare monthly program performance reviews using the 
HAPMIS; HQUSACE Annual Management Command Plan and Management Control 
Checklist. In addition, program monitoring will also be conducted 
(through HAPMIS and CEFMS reports) at the Headquarters Department of 
the Army and at the DUSD(I&E) levels.


Sec.  239.14  On-site inspections.

    The HQUSACE and its major subordinate commands may conduct periodic 
on-site inspections of district offices and monitor program execution 
through HAPMIS and CEFMS reports.


Sec.  239.15  List of HAP field offices.

------------------------------------------------------------------------
              Field office                For installations located in:
------------------------------------------------------------------------
U.S. Army Engineer District,             Alaska, Arizona, California,
 Sacramento, CESPK, 1325 J Street,        Nevada, Utah, Idaho, Oregon,
 Sacramento, CA 95814-2922, (916) 557-    Washington, Montana, Pacific
 6850 OR, 1-800-811-5532, Internet        Ocean Rim, and Hawaii.
 Address: http://www.spk.usace.army.mil.
U.S. Army Engineer District, Savannah,   Alabama, Georgia, North
 CESAS, Attn: RE-AH, P.O. Box 889,        Carolina, South Carolina,
 Savannah, GA 31402-0889, 1-800-861-      Florida, Ohio, Illinois,
 8144, Internet Address: http://          Indiana, Maryland, Delaware,
 www.sas.usace.army.mil.                  Michigan, Kentucky, District
                                          of Columbia, Virginia,
                                          Pennsylvania, Tennessee, New
                                          Hampshire, Rhode Island, New
                                          York, Vermont, Mississippi,
                                          Massachusetts, Connecticut,
                                          Maine, New Jersey, West
                                          Virginia and Europe.
U.S. Army Engineer District, Fort        Arkansas, Louisiana, Oklahoma,
 Worth, CESWF, P.O. Box 17300, Fort       Texas, New Mexico, Colorado,
 Worth, TX 76102-0300, (817) 886-1112,    Iowa, Nebraska, Michigan,
 1-888-231-7751, Internet Address:        Minnesota, North and South
 http://www.swf.usace.army.mil.           Dakota, Wisconsin, Wyoming,
                                          Kansas, and Missouri.
------------------------------------------------------------------------

    HAP CENTRAL OFFICE, Homeowners Assistance Program, HQ U.S. Army 
Corps of Engineers Real Estate Directorate, Military Division, 441 G 
Street, NW., Washington, DC 20314-1000.

    Dated: November 10, 2010.
Morgan F. Park,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2010-28756 Filed 11-15-10; 8:45 am]
BILLING CODE 5001-06-P