Air Force Maj. Justice Sakyi's change-of-station orders to Germany came with a built-in dilemma: what to do about his family's home in Maryland.
He and his wife, Olivia, bought the single-family house in Bowie in early 2006, near the height of the housing bubble.
Then came the bust.
Selling for what they owe is impossible. They can't rent the place out for nearly enough to cover the mortgage. And they haven't been able to negotiate a lower payment.
"We believe in miracles still happening and so we are waiting for ours, to get rid of the house," Olivia Sakyi wrote in an email from Spangdahlem, Germany.
About 185,000 service members who own homes get orders to relocate each year, according to the Consumer Financial Protection Bureau. The agency estimates that potentially tens of thousands of them are in some form of housing bind: underwater on their mortgages, facing foreclosure or both.
Their credit scores aren't the only things at stake. Financial problems can endanger security clearances.
Hoping to ease the strain, regulators took steps in the last few months to make it easier for relocated military members to get loan modifications to lower payments.
They aren't disqualified from the federal Home Affordable Modification Program simply because they no longer live in the homes, the Treasury Department said in May.
And in June, the regulator who oversees Fannie Mae and Freddie Mac said change-of-station orders are a sufficient reason to approve a short sale on a mortgage held by one of the financing giants, which allows an owner to sell a home for less than he or she owes on it.
If the property was purchased before July 1, Fannie and Freddie will not pursue such a service member for the remainder of the mortgage balance, said Edward J. DeMarco, acting director of the Federal Housing Finance Agency.
The Pentagon says short sales generally should not affect security clearances. Defense officials say the consolidation of clearance hearings and appeals under a single office — they were formerly conducted separately by each service branch — should lead to more consistency in the way such cases are handled.
"If circumstances are outside of a service member's control — in other words, they own a home and they're being required to [make a] permanent change of station — … a short sale may be the most responsible step they can take and they will not be looked at unfavorably," said Maj. Shawn McKelvy, deputy director of legal policy for the Office of the Under Secretary of Defense for Personnel and Readiness.
But time is running out for help from a federal program that covers the difference between a service member's home sale price and mortgage balance.
The Homeowners Assistance Program, which was expanded temporarily in 2009 to cover restationed service members, won't accept applications from that group after Sept. 30, according to theU.S. Army Corps of Engineers. Those who bought homes after June 2006 never qualified for the assistance.
Margaret Woda, a real estate agent in Crofton who specializes in military moves, said she always tries to see if service members qualify for the program because it's the best of the few options available. About 7,900 transferred service members have received the help nationwide, with more in the queue.
"It is very predictable for anybody that qualifies for it — unlike a short sale, where you're in negotiations with a bank … and it can go on forever," said Woda, with Long & Foster.
One of her clients, Navy Lt. Ethan Karp, is grateful he was eligible for the Homeowners Assistance Program.
Karp thought his odds of staying in the area for a while were good when he paid $385,000 for his Crofton home in 2005. But he was transferred to California in 2008.
He sold in 2010 for about $120,000 less than his purchase price. The Homeowners Assistance Program covered the remaining mortgage balance.
Karp spent two years renting the home in Crofton for less than his mortgage payment before he was finally able to sell with the program's help. He said his mortgage broker wasn't able to suggest any other steps he could take, short of handing the keys back to the bank.
"It was almost like, 'If you're not going to walk away from your house, there's not a whole lot we can do,'" said Karp, who is now stationed in Texas — and renting.
Olivia Sakyi says she was told recently that she and her husband don't qualify for the Homeowners Assistance Program. She said they've gotten the runaround on repeated requests for a loan modification or refinance, so now they're hoping Woda — their agent — can negotiate a short sale.
Sakyi, who is a civilian employee of the Air Force, said the experience has heaped stress on top of an already stressful situation. Her husband was in Afghanistan from last August until January, and they are now expecting their third child.
She said that she originally hoped to keep their home. No more.
"I just want it gone at this point," Sakyi, 35, said by telephone from Germany.
Holly Petraeus, who heads service member affairs at the new Consumer Financial Protection Bureau, said she has heard many stories of housing woe.
She talks of a commander in Florida who doesn't have enough space in his barracks for all the people who want to live on base because they left their families behind in homes they couldn't sell.
Another theme she hears is mortgage servicers giving faulty information and being slow to respond to military members.
In June, her agency issued a warning to mortgage servicers: If you abuse a member of the military, expect "appropriate enforcement action."
"Civilians in many cases — or most cases — have the option of hunkering down and trying to wait until housing values go back up," Petraeus said. "Service members simply can't do that."