When a loan is assumed by DOD under HAP, the holder will cancel any existing insurance and arrange to have the refund sent to the former mortgagor. Our Loan Guaranty Information Bulletin No.4 is rescinded. It explains HAP and incorporates the information contained above. Generally, full-time federal civilian employees and active duty military personnel employed at affected military installations are eligible to apply for HAP benefits. DOD determines which military installations are eligible for HAP since not all base closings involve a significant economic impact on the community served by the base.
HAP works in three ways.
An amount up to the difference between 95 percent of the fair market value prior to the closure announcement and the appraised value of the property at sale may be paid under HAP to compensate eligible employees. In buying the home, the payment under HAP is the greater of 75 percent of the fair market value prior to the closure announcement or the amount of the mortgage balance. Loan Defaults and Liquidations. Generally, if the loan is foreclosed or a deed in lieu of foreclosure accepted, the eligible DOD employee can apply to DOD for reimbursement of the loan holder's or VA's loss resulting from the loan termination. Loan Assumptions by DOD a.