Comment on DOD-2009-OS-0090-DRAFT-0020

My comment is in reference to the 239.6(b)(3) Maximum Home Purchase Price. In summary, using the 2009 Fannie Mae/Freddie Mac conforming loan limits as the limit for the maximum Prior Fair Market Value (PFMV) creates an unfair boundary for receiving any type of financial help, unnecessarily limits the benefits provided by the American Recovery and Reinvestment Act (ARRA) of 2009, and misses the mark to the stated goal of no financial help to ”million dollar homes”. There are numerous reasons why this policy is flawed…here are a few reasons…. In high cost housing areas, pinning the Maximum Home Purchase Price to the 2009 Fannie Mae conforming loan limits is an arbitrary number because it measures county wide prices which often include residential houses that are considered substandard for military members (i.e slums and high crime areas with bad schools.) As a result, the average county wide price is significantly lower than the cost of housing a military member would incur to live in a safe neighborhood with good schools. If conforming limits are needed, they should follow the same trend as the DOD BAH rates. Based on the existing proposed limits there is little variation between high cost metro areas and rural ones. Military members who bought in metro areas could have easily invested more than the conforming limits to be in a modest 4 bedroom house with good schools. This same type of house in a rural area in the same state is 30-50 % less expensive, yet the loan limits hardly vary. This clearly shows that the policy as written is flawed. The rule has a hard limit and should be graduated. For example: 2 military members might have bought homes next to each other with one paying $2,000 more than the other - if both homes drop in value by $100,000 (Which is highly likely in some areas of the country for a $400,000 home) but the person who paid more is $1,000 over the cap then they would get nothing while the other person could get $90,000!! That is outrageous and unfair. The system needs to be graduated. The language in the ARRA allows financial assistance up to 95% and does not restrict the home’s PFMV. The DOD has arbitrarily limited the amount of relief to 90% vice 95% and has additionally restricted this guidance to essentially make it suitable for only first time home buyers who could not afford a down payment. Perhaps this was done to ensure that the $550M authorization was not exceeded, if so it short sided. DOD leadership should have the fortitude to get additional funding, if required, to remedy the situation for ALL service members in the manner that Congress intended. This is just like the “cash for clunkers” program where the initial appropriation was way too low, and Congress later provided additional funding for the program. DOD needs to learn a lesson from this and help all its members not just some. The cap is intended to “prevent taxpayers from ‘bailing out’ million-dollar homes” but is shortsighted by focusing on the purchase price of the home as opposed to the loan amount. Someone who purchased a home that is below the loan limit with no money down is being helped while someone who purchased a home above the limit with a significant down payment is not. The result is the responsible homeowners who put 20% or more down on their home, thereby incurring significant risk, may receive no government assistance while the individual who financed 100% of their home does receive benefits. The cap limit, aside form being too low and not graduated, should be based on the loan lime and not the purchase price. I DON’T LIVE IN A MILLION DOLLAR HOME…AND I NEED HELP! I understand that Congress and the American Public do not want to bailout a mansion or exotic waterfront property worth millions of dollars. However, restricting the PFMV to $417K to $729.5K depending upon city/county/parish is a LONG LONG way from a million dollar home. There is most definitely a segment of larger yet modest homes (4 BR, 2000 to 2500 SF homes - which is not unreasonable for a 4 child, 6 member traditional family) that exceed that PFMV and is getting no relief based upon the current PFMV maximum home purchase price definition. This program should help that military family too. Under the current policy they get nothing which is not the intent of the ARRA bill.