Active Military Duty
The Service Members Civil Relief Act of 2003 (SCRA), formerly known as The Soldiers’ and Sailors’ Civil Relief Act of 1940, grants legal protection to active duty military personnel who meet the requirements. Our goal is to provide military personnel with financial relief from current mortgage terms due to difficulties while serving our country. Our debt settlement services include preparing the necessary documentation and negotiating with mortgage lenders on your behalf.
Am I eligible?
This SCRA applies to active duty military personnel who engaged in a mortgage obligation prior to enlistment or prior to being ordered to active duty. This includes the Army, Navy, Marine Corps, Air Force, Coast Guard, commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration engaged in active service, reservists ordered to report for military service, people ordered to report for training under the Military Selective Service Act, and guardsmen called to active service for more than 30 consecutive days. Dependents of service members may also be entitled to protection.
Am I entitled to debt relief?
The act limits the interest that may be charged on mortgages incurred by a service member (including debts acquired 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 6% 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. You must ask for a temporary interest rate reduction through a written request to your mortgage lender along with a copy of your military orders. The request may be submitted as soon as the orders are issued but no later than 180 days after the date of your release from active duty military service. A mortgage lender has the right to submit to the court a request for relief from the interest rate reduction if they believe that military service has not affected your ability to pay your mortgage according to the terms.
What if I end up struggling to pay my mortgage even at the lower rate?
We may get your mortgage lender to let you stop paying the principal amount due on your loan during active duty service. Lenders are not required, but generally try, to work with our firm to let service members keep their homes. You may still owe this amount but will not be required to repay it until after you complete active duty service. Lenders have other programs to assist borrowers who can’t make their mortgage payments. Depending on the circumstances involved, we may be able to work out another loss mitigation option for you such as forbearance.
Am I protected against foreclosure?
Mortgage lenders may not foreclose on your property while you are on active duty or within 90 days after military service without court approval. In court, the lender would be required to show that your ability to repay the debt was not affected by your 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 notifying you of your activation
- Your FHA case number
- Evidence that the debt precedes your activation date
The HUD has reminded the FHA lenders of their obligation to follow the Act. Once notified that a borrower is on active military duty, the lender must advise the borrower or his 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% 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 payments 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 deferring 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?
Service members 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 service members can also contact or visit local military legal assistance offices in their area. For further inquiries, you may email the Debt Reduction Law Center today.
