The following information is provided regarding mortgage payment relief and protection from foreclosure provided under the Servicemembers Civil Relief Act (SCRA, formerly known as The Soldiers' and Sailors' Civil Relief Act of 1940).
Who Is Eligible?
The provisions of the Act apply to active duty military personnel who had a mortgage obligation prior to enlistment or prior to being ordered to active duty. This includes members of the Army, Navy, Marine Corps, Air Force, Coast Guard; commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration who are engaged in active service; reservists ordered to report for military service; persons ordered to report for induction under the Military Selective Service Act; and guardsmen called to active service for more than 30 consecutive days. In limited situations, dependents of servicemembers are also entitled to protections.
Pursuant to the statutory amendment, HUD has developed, in consultation with the Departments of Defense and Treasury, the form for the required notice of servicemember rights (Attachment 1, SCRA Notice Disclosure). All mortgage loans, including conventional mortgages and mortgages insured by HUD are subject to the notification requirement that became effective June 5, 2006. The notice must:
||Be sent to all homeowners who are in default on a residential mortgage;|
||Include the toll-free military one-source number to call if servicemembers or their dependents require further assistance (1-800-342-9647); and |
||Be made within 45 days from the date a missed payment was due, unless the homeowner pays the overdue amount before the expiration of the 45-day period.|
Am I Entitled To Debt Payment Relief?
The Act limits the interest that may be charged on mortgages incurred by a service member (including debts incurred jointly with a spouse) before he or she entered into active military service. Mortgage lenders must, at your request, reduce the interest rate to no more than six percent per year during the period of active military service and recalculate your payments to reflect the lower rate. This provision applies to both conventional and government-insured mortgages.
Is The Interest Rate Limitation Automatic?
No. To request this temporary interest rate reduction, you must submit a written request to your mortgage lender and include a copy of your military orders. The request may be submitted as soon as the orders are issued but must be provided to a mortgage lender no later than 180 days after the date of your release from active duty military service.
Am I Eligible Even if I Can Afford To Pay My Mortgage At A Higher Interest Rate?
If a mortgage lender believes that military service has not affected your ability to repay your mortgage, they have the right to ask a court to grant relief from the interest rate reduction. This is not very common.
What If I Can't Afford to Pay My Mortgage Even At the Lower Rate?
Your mortgage lender may allow you to stop paying the principal amount due on your loan during the period of active duty service. Lenders are not required to do this but they generally try to work with service members to keep them in their homes. You will still owe this amount but will not have to repay it until after your complete your active duty service.
Additionally, most lenders have other programs to assist borrowers who cannot make their mortgage payments. If you or your spouse find yourself in this position at any time before or after active duty service, contact your lender immediately and ask about loss mitigation options. Borrowers with FHA insured loans who are having difficulty making mortgage payments may also be eligible for forbearance and/or HUD's other Loss Mitigation Programs. More information about help for homeowners who are unable to make payments on a mortgage is available on the HUD website.
Am I Protected against Foreclosure?
Mortgage lenders may not foreclose, or seize property for a failure to pay a mortgage debt, while a service member is on active duty for nine (9) months grace period prior to December 31, 2012 unless they have the approval of a court. After December 31, 2012, the grace period for Service member protection will revert back to 3 months. In a court proceeding, the lender would be required to show that the service member's ability to repay the debt was not affected by his or her military service.
What Information Do I Need To Provide To My Lender?
When you or your representative contact your mortgage lender, you should provide the following information:
||Notice that you have been called to active duty;|
||A copy of the orders from the military service notifying you of your activation;|
||Your FHA case number; and |
||Evidence that the debt precedes your activation date.|
HUD has reminded FHA lenders of their obligation to follow the Act. If notified that a borrower is on active military duty, the lender must advise the borrower or representative of the adjusted amount due, provide adjusted coupons or billings, and ensure that the adjusted payments are not returned as insufficient payments.
Will My Payments Change Later? Will I Need To Pay Back The Interest Rate "Subsidy" At A Later Date?
The change in interest rate is not a subsidy. Interest in excess of 6 percent per year that would otherwise have been charged is forgiven. However, the reduction in the interest rate and monthly payment amount only applies during the period of active duty. Once the period of active military service ends, the interest rate will revert back to the original interest rate, and the payment will be recalculated accordingly.
How Long Does The Benefit Last? Does The Period Begin And End With My Tour Of Duty?
Interest rate reductions are only for the period of active military service. Other benefits, such as postponement of monthly principal payments on the loan and restrictions on foreclosure may begin immediately upon assignment to active military service and end on the third month following the term of active duty assignment.
How Can I Learn More About Relief Available To Active Duty Military Personnel?
Read more information about the Servicemembers Civil Relief Act, sponsored by the Legal Assistance Policy Division, Office of The Judge Advocate General, U.S. Army.
Servicemembers who have questions about the SCRA or the protections that they may be entitled to may contact their unit judge advocate or installation legal assistance officer. Dependents of servicemembers can also contact or visit local military legal assistance offices where they reside. A military legal assistance office locator for each branch of the armed forces is available at http://legalassistance.law.af.mil/content/locator.php