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) ("the Act").
Guidance regarding the SCRA can be found in the FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1). See the "Servicing FHA-Insured Mortgages for Servicemember-Borowers" under the Servicing and Loss Mitigation section for detailed instructions.
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. 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 obtained 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 one year thereafter 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?
The SCRA states that in a legal action to enforce a debt against real estate that is filed during, or within one year after the servicemember’s military service, a court may stop the proceedings for a period of time, or adjust the debt. In addition, the sale, foreclosure, or seizure of real estate shall not be valid if it occurs during or within one year after the servicemember’s military service unless the creditor has obtained a valid court order approving the sale, foreclosure, or seizure of the real estate.
The one year after military service legal protection period is effective through December 31, 2017 under provisions of “The Foreclosure Relief and Extension for Servicemembers Act of 2015” enacted on March 31, 2016 (Public Law 114-142). If this SCRA provision is not amended or revised, the legal protection period will revert to 90 days after military service effective January 1, 2018.
What Information Do I Need To Provide To My Lender?
When you or your representative contacts 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 and one year thereafter. The interest rate will then revert back to the original interest rate, and the payment will be recalculated accordingly.
How Can I Learn More About Relief Available To Active Duty Military Personnel?
Servicemembers and dependents with questions about the SCRA may contact their unit’s Judge Advocate or an installation Legal Assistance Officer. A military legal assistance office locator for each branch of the armed forces is available at http://legalassistance.law.af.mil/content/locator.php.
“Military OneSource” is the U. S. Department of Defense’s information resource. For more information regarding legal issues and available assistance, please go to www.militaryonesource.mil/legal or call 1-800- 342-9647 (toll free from the Unites States). Dialing instructions for areas outside the United States are provided on the website.