Active Duty Military & Foreclosure
Facing a foreclosure is hard on anyone but especially difficult if you are in the military and on active duty. Fighting a foreclosure while fighting for your country seems paradoxical, and it seems that the government thinks so as well. In December 2003, the Servicemembers Civil Relief Act was enacted to alleviate potential economic and legal burdens that active service men and women may face.
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What Does the SCRA Do?
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The SCRA is an amendment to the previous Soldiers' and Sailors' Civil Relief Act. Members of the Army, Navy, Marine Corps, Air Force and Coast Guard receive protection under the act while in active duty status. Reservists called into duty also receive protection under the act. Protection under the SCRA starts the day that a serviceman receives his orders or upon deployment. The SCRA regulates legal actions such as foreclosures initiated against military personnel. Under this act certain civil obligations such as loans and interest may be postponed or suspended while the service member is under active duty.
Interest Rate Reduction
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Under the SCRA, service members are eligible for an interest rate deduction on their home mortgage. The act limits the amount of mortgage interest to no more than 6 percent for active duty personnel. This reduction is not automatic for military personnel and requires a formal request submission to the lender. Under the act, lenders must recalculate the payments to reflect the lower rate. This lower rate remains in force for the entire time that the member is on active duty. In rare cases, lenders may challenge the act in court if they believe that military service has no effect on the ability to repay the loan.
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Foreclosure Protection
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Although no requirements exist under the SCRA for a suspension of mortgage payments, some lenders offer it and allow military personnel to resume mortgage payments when their tour of duty is complete. According to the relief act, lenders cannot foreclose or seize the property of military personnel while they are on active duty. Service members receive a three-month grace period after the tour of duty is over, before the foreclosure can commence. Lenders may dispute this in court; however, they must prove that the service member's ability to pay is not affected by his active duty status. Service members must provide copies of the call to service notice to their lenders, as well as evidence that the loan was issued before they were called to duty.
How Long do SCRA Benefits Last?
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The interest rate reduction benefit is effective for the active duty period only. Foreclosure restrictions start on the active duty assignment date and last until the end of the third month following the completion of the assignment. If the lender grants a suspension of loan payments, they would resume on the third month following the end of the assignment as well. In some situations, the SCRA protection extends to spouses who are co-signers on the loan. Check with the unit judge advocate or legal assistance officer for any questions regarding benefits under the SCRA.
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- Photo Credit military march image by Paul Blanche from Fotolia.com
