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August 25, 2016
SCRA –Servicemembers Civil Relief Act
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Get to Know Your Co-presenter
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Robin Stout Migala
• Consultant to the industry
• Over 47 years’ experience in residential lending and default
servicing
• 23 years with Freddie Mac in Housing Outreach
• Specialty in loss mitigation and foreclosure prevention for
housing counselors and real estate professionals
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Get to Know Your Co-presenter
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Carl E. Windom
• Accredited Financial Counselor AFC®
Windom Wisdom LLC
US Navy Veteran
• 27 years credit union industry regulatory experience
National Credit Union Administration (Retired NCUA)
• 10 years NeighborWorks America faculty member
• Credit Union Specialist
Association for Financial Counseling and Planning Education (AFCPE®)
National Federation of Community Development Credit Unions
• Consumer Compliance Laws Expert
• Online financial advisor
NerdWallet
WalletHub
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GoToWebinar
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Toll Number: 1-562-247-8321
Access Code: 171-027-358
Webinar ID: 153-189-115
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The Counselor’s Corner…
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THE Online Resource for Housing Counseling and Real Estate Professionals
Your one-stop Resource Center
• Provides information that enhances your knowledge of industry
changes and regulatory updates in a timely manner, all in one location
• Our online “Learning Center” provides Continued Education Hours for
your active participation
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Certificate of Completion Eligibility
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• All responses to the Knowledge Checkpoint and Polling Questions are tracked.
• Only those who register for and attend a webinar and who pass the post-webinar test will
receive a Certificate of Completion showing the hours.
• Within two hours after the webinar ends, we will e-mail the online testing link. Please check your
SPAM folder or your company’s quarantine for this e-mail.
IMPORTANT! Please add [email protected] to your address book
• Webinar attendees who pass the post-webinar test with a score of 80% or higher will be
awarded a Certificate of Completion.
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Webinar Exit Survey
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• A survey will pop up at the end of today’s webinar - please complete
• Your Internet pop-up blocker must be disabled to view and complete the survey
• We appreciate your feedback!
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Case Studies
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• Toward the end of the presentation, we will review a few case studies
• We encourage you to comment on each scenario
• Please enter your answers in the question box
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National Industry Standards
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The Counselor’s Corner supports the mission of the National Industry
Standards in Foreclosure, Homeownership Counseling & Education.
• The Standards help practitioners and organizations serve families and communities
in a consistent and professional manner.
• This webinar:
Promotes consistent & quality counseling
Builds competency & knowledge of responsibilities
Provides useable resources
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Counseling Setting/Format
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Counseling services may take place:
• In the office of the housing counseling agency
• Alternate location (for example, a client’s home and must be mutually acceptable to the housing counselor and client)
Alternative formats can include:
• Telephonic counseling
• Remote counseling systems designed using Skype technology, video cameras and the Internet
http://portal.hud.gov/hudportal/documents/huddoc?id=76101HSGH.pdf
Skype technology systems can also be used to deliver group education workshops and sessions.
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SCRA
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Our objective today is to enable you to:
• Understand the SCRA law
• Know when the law applies
• Review investors’ requirements on SCRA
• Get resources available to you and your Servicemember clients
DISCLAIMER:
This training is a summary of the detailed requirements of PUBLIC LAW 108–189—DEC. 19, 2003 Servicemembers Civil Relief Act and all amendments and is not a substitute for those
requirements. This training is meant for educational purposes only. For additional information, please reference the applicable sections of the Law and Amendments. Please note that
the Law is subject to change at any time.
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Polling Question #1
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Have you heard of SCRA –
the Servicemembers Civil Relief Act?
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Military Culture
1. Highly Disciplined
2. Lots of Professionalism
3. Highly Trained
4. Lots of Comradery
5. Lots of Pride
6. Frequent Deployments
7. Lots of Uncertainty
8. Access to Easy Credit
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What is the SCRA?
The Servicemembers Civil Relief Act (SCRA), enacted in 2003 and amended several times since then and formerly
known as the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA), is a federal law that provides protections to
individuals in ACTIVE DUTY military service.
Purpose is to postpone, suspend, terminate, or reduce the amount of certain civil obligations so that members of the
armed forces can focus their full attention on their military responsibilities without adverse consequences for
themselves or their families.
Protections:
• Rental agreements
• Security deposits
• Prepaid rent
• Evictions
• Installment contracts
• Credit card interest rates
• Automobile repossessions
• Automobile leases
• Mortgage interest rates
• Mortgage foreclosures
• Civil judicial proceedings
• Life insurance
• Health insurance
• Income tax payments
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Who is Protected under the SCRA?
The SCRA protects Servicemembers during periods of military service and, in certain
instances, for a period of time after military service has ended.
While on active duty (including spouse and dependents under certain conditions) or
absent from duty because of being wounded or being granted leave, protected
Servicemembers are:
• Army
• Navy
• Air Force
• Marine Corps
• Coast Guard
National Guard and
Reserves with specific
type of activation orders
If an active service
commissioned officer of:
• Public Health Service
• National Oceanic and
Atmospheric Administration
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National Guard• The National Guard of the United States, part of the reserve components of the U.S. Armed Forces, is a reserve military
force composed of National Guard military members or units of each state and the territories of Guam and the Virgin
Islands, and of Puerto Rico as well as of D.C., for a total of 54 separate organizations.
• All members of the National Guard of the United States are also members of the militia of the U.S.
• The majority of National Guard soldiers and airmen hold a civilian job full-time while serving part-time as a National Guard
member.
• These part-time guardsmen are augmented by a full-time cadre of Active Guard & Reserve (AGR) personnel in both the
Army National Guard and Air National Guard, plus Army Reserve Technicians in the Army National Guard and Air Reserve
Technicians (ART) in the Air National Guard.
• The National Guard is a joint activity of the (DoD) composed of reserve components of the U.S. Army and the U.S. Air
Force, the Army National Guard of the U.S. and the Air National Guard of the U.S. respectively.
• National Guard eligibility for SCRA benefits comes under a call to active service authorized by the President or the
Secretary of Defense for a period of more than 30 consecutive days for responding to a national emergency declared by
the President and supported by Federal funds.
https://www.gpo.gov/fd
sys/pkg/USCODE-
2013-
title32/html/USCODE-
2013-title32.htm
https://www.law.cornell.ed
u/uscode/text/10/12304
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Reserves • A reserve force is a military group composed of citizens who combine a military role with a civilian career
• They are not normally kept under arms and their main role is to be available to fight when a nation
mobilizes for total war or to defend against invasion
• Reserve forces are generally not considered part of a permanent standing body of armed forces
• The existence of reserve forces allows a nation to reduce its peacetime military expenditures while
maintaining a force prepared for war.
• Reserve force members are civilians who maintain military skills by training, typically one weekend a
month
• A member of a reserve component who is ordered to report for military service is entitled to the rights
and protections during the period beginning on the date of the member's receipt of the order and ending
on the date on which the member reports for military service
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Is Your Client on Active Duty?
https://scra.dmdc.osd.mil/single_record.xhtml
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Asserting Rights Under the SCRA
A Servicemember asserting his rights under SCRA cannot be a basis for:
• A lender, servicer or creditor determining that a Servicemember is unable to pay a financial obligation
• A creditor denying credit, revoking credit, changing the terms of an existing credit arrangement, or
refusing to give a Servicemember credit in the amount or on the terms he requested
• A lender, servicer or creditor reporting negative information to credit bureaus
• An insurer refusing to insure the Servicemember or change the terms or conditions of his insurance
A Servicemember may waive any of the rights and protections provided to him by the SCRA. However, a
waiver of certain SCRA rights and protections must be in writing.
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Knowledge Checkpoint Question #1
The SCRA only protects Servicemembers. It does not protect spouses or
dependents.
Is this true or false?
False.
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Financial Capability Study
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http://www.usfinancialcapability.org/resultsm.php
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Credit Reporting
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Credit Reporting, continued…
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Application by a Servicemember for, or receipt by a Servicemember of, a stay, postponement, or suspension pursuant to this Ac t in the
payment of a tax, fine, penalty, insurance premium, or other civil obligation or liability shall not itself (without regard to other
considerations) provide the basis for any of the following:
1. A determination by a lender or other person that the servicemember is unable to pay the civil obligation or liability in acco rdance with
its terms.
2. With respect to a credit transaction between a creditor and the Servicemember —
A. a denial or revocation of credit by the creditor;
B. a change by the creditor in the terms of an existing credit arrangement; or
C. a refusal by the creditor to grant credit to the Servicemember in substantially the amount or the terms requested.
3. An adverse report relating to the creditworthiness of the servicemember by or to a person engaged in the practice of assembli ng or
evaluating consumer credit information.
4. A refusal by an insurer to insure the servicemember.
5. An annotation in a Servicemember's record by a creditor or a person engaged in the practice of assembling or evaluating consu mer
credit information, identifying the Servicemember as a member of the National Guard or a reserve component. 6. A change in the terms offered or conditions required for the issuance of insurance.
§ 518. Exercise of rights under Act not to affect certain future financial transactions [Sec. 108]
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Breaking a Motor Vehicle Lease
A Servicemember may terminate a motor vehicle lease if he:
• Receives a call to duty or orders of 180 days or more
• Receives a call to duty or orders for a shorter period of time but extended to a period of at least
180 consecutive days
• Receives certain permanent change of station orders or orders to deploy for a period of at least
180 days
If the Servicemember purchased or leased a vehicle and made a deposit or installment payment
before entering military service, the creditor or lessor may not terminate the contract or repossess
the vehicle for breach of contract without a court order while in military service.
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Breaking a Rental Lease
• While in military service, the Servicemember may
terminate, without penalty, residential and business
leases entered into prior to joining the military
• The Servicemember may also terminate residential and business leases entered into
while in military service if the Servicemember receives orders to deploy for a period of at
least 90 days, or Permanent Change of Station (PCS) orders
• In most cases, the Servicemember has the right to have the security deposit refunded
• The Servicemember will be responsible for any unpaid rent or other lease amounts due
before the effective date of termination, as well as any taxes, fees, and other reasonable
charges, such as charges for excess wear and damages
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Protection from Rental Eviction
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• If the monthly rent is less than $3,451.20 (as of January 1, 2016), the landlord may not evict
the Servicemember or dependents from a home that is used as a primary residence during a
period of military service without a court order
• If an eviction action is filed against the Servicemember or one of his dependents, the court
must temporarily stay the proceedings or adjust the amount of the financial obligation if the
Servicemember can show the inability to meet financial obligations under the lease because
of military service
https://www.federalregister.gov/articles/2016/02/09/2016-
02445/publication-of-housing-price-inflation-adjustment
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High Interest Rates
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• A Servicemember has the right to request that interest rates, including all fees, paid on all
credit cards, mortgages, student loans (as of 2008, including federally-subsidized student
loans), and other loans obtained prior to entering military service be reduced to six percent
(6%) per year during military service
• For pre-military service mortgages, a Servicemember is entitled to receive the six percent
(6%) interest rate not only for the period of military service, but also for one year after
completion of military service
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Storage Liens
• A person holding a lien on the property or effects of a servicemember may not, during any period of military
service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or
effects without a court order granted before foreclosure or enforcement.
• The term "lien" includes a lien for storage, repair, or cleaning of the property or effects of a servicemember or a
lien on such property or effects for any other reason.
• In a proceeding to foreclose or enforce a lien subject to this section, the court may on its own motion, and shall
if requested by a servicemember whose ability to comply with the obligation resulting in the proceeding is
materially affected by military service –
stay the proceeding for a period of time as justice and equity require; or
adjust the obligation to preserve the interests of all parties.
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Cell Phones
• If a Servicemember receives military orders to relocate for at least 90 days
to a location that does not support his cell phone service contract, the
Servicemember may terminate that contract at any time without penalty
• In addition, if the Servicemember is relocated for a period of three years or
less, he has the right to retain his cell phone number in certain
circumstances
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Life Insurance - Personal
• Life insurance companies cannot terminate, limit or restrict coverage or require payment of additional
premiums if a Servicemember engages in military service
• Lapse protection – determined by Secretary of Veterans Affairs
• Guarantee of premium and interest by the United States
• Court determines the ability of the Servicemember to comply with the terms of the obligation, and
whether materially affected by military service
• Treatment of guaranteed premiums - not considered due and unpaid
• Policy restrictions apply
• Misdemeanor - fined or imprisoned or both
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Life Insurance - Commercial
Servicemembers may request deferment of certain commercial life insurance premiums and other payments:
• During period of military service and two years thereafter
• Department of VA must approve request
United States will guarantee the payments
Policy shall continue in effect
Servicemember has two years after period of service to repay all premiums and interest
The SCRA increases the amount of insurance this program will cover to the greater of $250,000 or the maximum
limit of the Servicemember’s group life Insurance.
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Taxes and Public Lands
Regarding personal property, money, credits, and real property:
• Property may not be sold to enforce the collection of tax or assessment without a court order
• Servicemember has the right to redeem property up to 180 days after discharge
• Interest on a tax or assessment is limited to 6%
• Applies to servicemember and dependents
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Civil Court Cases
• If a Servicemember receives notice that a civil action has been filed, or that a
child custody proceeding has been initiated against him during a period of
military service or within 90 days thereafter, the Servicemember has the right to
request that the action or proceeding be stayed for a period of at least 90 days
• The Servicemember also has the right to request that the court further extend
such a stay if necessary
• If the request for an extension of a stay is denied, then the court must appoint
an attorney to represent the Servicemember in the action or proceeding
The Servicemember should contact his JAG office.
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Polling Question #2
Is there a military base near your office?
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Wage Garnishment and Default Judgment
Garnishment:
• If a Servicemember cannot comply with an order garnishing his wages or money in his
accounts because of military service, he may request that the court temporarily stop the
money or property from being taken
• This right applies only to actions and proceedings that were commenced against the
Servicemember before the period of military service, during the period of military service, or
within 90 days after the period of military service ended
Default Judgment –
In certain actions, if a court enters a judgment against a Servicemember when he failed to
appear or defend himself during a period of military service or within 60 days thereafter, he has
the right to request that the court reopen the judgment to allow himself to defend the action
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Deferred Income Taxes
• The Internal Revenue Service (IRS) and state and local taxing authorities
must grant a deferral of income taxes due before or during military
service if the ability to pay such income tax is materially affected by
military service
• No interest or penalty can be added as a result of this type of deferral
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Small Business Owners
• If a Servicemember is a small-business owner, nonbusiness assets and
military pay are protected from being available to satisfy creditors while he
is on active duty
• This applies to debts or obligations a Servicemember may have due to his
business
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Professional Liability Insurance
• If a Servicemember is a professional in health care or legal services, or another
professional as determined by the Secretary of Defense, and he is called to active
duty, he may suspend his professional liability insurance policy upon written
request to the insurance carrier
• A Servicemember doesn’t have to pay
premiums for suspended insurance and
any premiums he pays while on active
duty must be refunded
• To reinstate suspended insurance, the Servicemember must transmit a request to
the insurance carrier within thirty days of release from active duty
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Knowledge Checkpoint Question #2
The Internal Revenue Service (IRS) and state and local taxing authorities must grant a deferral of
income taxes due before or during military service if the ability to pay such income tax is materially
affected by military service.
Is this true or false?
True and no interest or penalty can be added as a result of this type of deferral.
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Voting Rights
Residency for state, federal, or local voting purposes, like a Servicemember’s
tax residency, is unaffected by absence from his usual voting state due to
military service.
Similar protections exist for spouses.
http://www.military.com/spouse/military-relocation/pcs-
moves/servicemember-and-family-voting.html
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Fines and Penalties Under Contracts
• Prohibition of penalties - when an action for compliance with the terms of a
contract is stayed pursuant to this Act, a penalty shall not accrue for failure to
comply with the terms of the contract during the period of the stay.
• Reduction or waiver of fines or penalties - if a servicemember fails to perform an
obligation arising under a contract and a penalty is incurred arising from that
nonperformance, a court may reduce or waive the fine or penalty if —
the servicemember was in military service at the time the fine or penalty was incurred; and
the ability of the servicemember to perform the obligation was materially affected by such
military service.
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Statute of Limitations
• The period of a Servicemember's military service may not be included in
computing any period limited by law, regulation, or order for the bringing of
any action or proceeding in a court, or in any board, bureau, commission,
department, or other agency of a State (or political subdivision of a State) or
the United States by or against the Servicemember or the Servicemember's
heirs, executors, administrators, or assigns
• A period of military service may not be included in computing any period
provided by law for the redemption of real property sold or forfeited to
enforce an obligation, tax, or assessment
• This section does not apply to any period of limitation prescribed by or
under the internal revenue laws of the United States
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Administrative Remedies
Certificates of service; persons reported missing—Sec. 602 (50 U.S.C. app. §582)
A servicemember who is missing in action is presumed to continue in military service until he or
she is accounted for or his or her death has been reported to the Department of Defense or
determined by a court or board with the authority to make such determination.
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Further Relief
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§ 591. Anticipatory relief [Sec. 701]
Pursuant to Title VII guidelines, a Servicemember may, during military service or within 180 days of
termination of or release from military service, apply to a court for relief, stay or change –
• Any obligation or liability incurred by the Servicemember before the Servicemember’s military
service
• Tax or assessment due before or during military service, if ability to pay is affected by military
service
• Stay of enforcement of real estate and other contracts
• Automatic extension of power of attorney if Servicemember goes into “missing” status
• Suspend & then reinstate professional liability insurance coverage
• Stay of civil or administrative actions
• Health insurance reinstatement with limitation on premium increases
• Guarantee of voting and tax residency for military personnel and their spouses
• Personal assets not to be used to satisfy business or trade obligations
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Who to Contact
If a Servicemember believes his rights were violated under SCRA, he should:
1. First contact the nearest Armed Forces Legal Assistance Program office (JAG) to see if the SCRA applies to
his particular situation. Dependents of servicemembers can also contact or visit local military legal
assistance offices where they reside
2. If that office cannot resolve the complaint, it may choose to forward the complaint to the Department of
Justice. The DOJ then will review the matter to determine whether DOJ action is appropriate
3. However, in emergency situations (such as an imminent foreclosure, eviction or repossession), the
Servicemember can contact Civil Rights Division’s Housing and Civil Enforcement Section: (202) 514-4713
TTY - 202-305-1882
U.S. Department of Justice Civil Rights Division
950 Pennsylvania Avenue, N.W.
Housing and Civil Enforcement Section, NWB
Washington, D.C. 20530
Email: [email protected]
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Foreclosure Prevention Hierarchy
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• Refinance
• Full and partial reinstatement
• Repayment and forbearance plans
• Retention workout options
• Liquidation workout options
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Polling Question #3
49
My agency's intake form DOES include a question
about active military duty.
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Mortgage Servicer Penalties
February 2011 - one of the largest servicers was discovered to have over 4,500 SCRA
violations against servicemembers. All five of the nation’s largest loan servicers were
found in violation of SCRA guidelines. Over the past four years, the Department of
Justice has made enforcement of the SCRA a top priority.
February 2012 - “National Mortgage Settlement” between the United States, 49 state
attorneys general, the District of Columbia and the nation’s five largest loan servicers:
• Vast majority of all foreclosures against Servicemembers now subject to court-ordered review for interest rate violations back
to January 1, 2008
• Minimum of four times the amount wrongfully charged
• Minimum of $116,785 plus lost equity
• All payments in addition to $25B settlement
• Remedying negative credit reporting resulting from SCRA violations
• Adopting policies to ensure future compliance, including DMDC checks and compliance monitoring
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Protection from Foreclosure
• If a Servicemember obtained a mortgage before he entered into military service,
SCRA requires the servicer to get a court order before it can foreclose on a home
during any period of military service and for a period of time thereafter
• The servicer must get a court order even in states that generally allow foreclosures
without a court order
• If the servicer seeks such a court order, and the
Servicemember can show that he has been unable
to meet his financial obligation because of his
military service, the court must temporarily stay the
proceedings or adjust the amount of the Servicemember’s obligation
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Mortgages and Trust Deeds (Original)
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• In an action filed during, or within nine monthsafter, a Servicemember's period of military service to enforce an obligation,
the court may, after a hearing and on its own motion and shall upon application by a servicemember when the
Servicemember's ability to comply with the obligation is materially affected by military service –
stay the proceedings for a period of time as justice and equity require; or
adjust the obligation to preserve the interests of all parties
• A sale, foreclosure, or seizure of property for a breach of an obligation shall not be valid if made during, or within nine
months after, the period of the Servicemember's military service except –
upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or
if made pursuant to an agreement
This section applies only to an obligation on real/personal property owned by a
servicemember that originated before the period of the Servicemember's
military service and for which the servicemember is still obligated.
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Mortgages and Trust Deeds – Updated
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The original SCRA Act in 2003 prohibited the nonjudicial “sale, foreclosure, or seizure” of real or personal property owned by a servicemember
securing a debt that originated before the servicemember entered military service without a court order.
This applied while the servicemember was on active duty and for 90 days after end of service.
The Housing and Economic Recovery Act of 2008 extended protections from 90 days to nine months.
The Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012 extended protections from nine months to one year.
The Helping Heroes Keep Their Homes Act of 2010 extended the one year protection expiration date to December 31, 2014
The Foreclosure Relief and Extension for Servicemembers Act of 2014 extended the one year protection expiration date to December 31, 2015
The Foreclosure Relief and Extension for Servicemembers Act of 2015 extended the one year protection expiration date to December 31, 2017
December 19, 2003 to July 29, 2008: 90 days February 2, 2013 to December 31, 2014: 1 year
July 30, 2008 to February 1, 2013: 9 months January 1, 2018: the nine month period will be restored
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How Many Mortgages are SCRA-eligible?
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http://www.gao.gov/products/GAO-14-221
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6% Mortgage Interest Rate Cap
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• SCRA enacted December 19, 2003
• Average 30-year fixed mortgage rate was 5.88%
• SCRA set rate cap for all borrowings at 6%
• Lowest average 30-year fixed mortgage going rate was 3.35% in November 2012
• As of today, August 25, 2016, average 30-year fixed mortgage going rate is 3.43%
• Highest average 30-year fixed mortgage going rate since December 19, 2003 was
6.76% in July 2006
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6% Mortgage Interest Rate Cap
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§ 527. Maximum rate of interest on debts incurred before military service [Sec. 207]
1. An obligation bearing interest at a rate in excess
of 6 percent per year shall not bear interest at a
rate in excess of 6 percent during the period of
military service and (just on mortgages) one year
thereafter
2. Interest at a rate in excess of 6 percent per year
that would otherwise be incurred is forgiven
3. The monthly payment must be reduced by the
amount of interest saved during the covered
period and re-amortized. This prevents the
acceleration of principal.
4. In order for an obligation of a Servicemember to be subject to the interest
rate limitation, the Servicemember shall provide to the creditor written
notice and a copy of the military orders calling the Servicemember to
military service
5. Upon receipt of written notice and a copy of orders calling a
Servicemember to military service, the creditor shall treat the debt in
accordance with the requirements effective as of the date on which the
Servicemember is called to military service
6. A court may grant a creditor relief from the limitations of this section if, in
the opinion of the court, the ability of the Servicemember to pay interest
on the obligation at a rate in excess of 6 percent per year is not materially
affected by the Servicemembers’ military service
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6% Mortgage Interest Rate Cap, continued…
57
§ 517. Waiver of rights pursuant to written agreement [Sec. 107]
• Any such waiver that applies is effective only if it is in writing and is executed as an instrument separate from the obligation
or liability to which it applies
• The waiver is effective only if made pursuant to a written agreement of the parties that is executed during or after the
Servicemember's period of military service
• The written agreement must specify the legal instrument to which the waiver applies and, if the Servicemember is not a
party to that instrument, the Servicemember concerned
• The waiver applies to the modification, termination, or cancellation of a contract, lease, or bailment; or an obligation
secured by a mortgage, trust, deed, lien, or other security in the nature of a mortgage
• It also applies to the repossession, retention, foreclosure, sale, forfeiture, or taking possession of property that is security
for any obligation; or was purchased or received under a contract, lease, or bailment
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Knowledge Checkpoint Question #3
Full compliance with the 6% interest rate cap on debts incurred before the Servicemember
entered military service requires both the reduction of the interest rate and re-amortization
of periodic loan payments.
Is this true or false?
True.
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Freddie Mac Requirements – Who is Eligible?
59
The SCRA applies to any borrower who is a Servicemember during a Period of Military Service if the following
conditions are met:
• The Mortgage is the contractual obligation of the Servicemember as the borrower or co-borrower under the
Note; and
• The Servicemember executed the Note or the assumption agreement before the reporting date or effective
date of the Servicemember's Period of Military Service as shown in military orders
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Freddie Mac Requirements – Foreclosure Relief
60
• Servicers must not start or complete foreclosure on a Servicemember’s primary residence
during the Period of Military Service, for one year after the date Military Service ended or
for one year after the Servicemember died during the Period of Military Service.
• Additionally, Servicers must not initiate or complete foreclosure where the borrower was
not a Servicemember, but the property is the primary residence of a Servicemember or a
dependent of a Servicemember during the Period of Military Service of a Servicemember,
for one year after the date Military Service ended or for one year after a Servicemember
died during the Period of Military Service.
• If the servicer believes that there are unusual circumstances that warrant initiating or
completing foreclosure prior to the time allowed, such as the property being vacant or
abandoned, the servicer must contact Freddie Mac for approval.
• The servicer must report a Servicemember who is receiving relief as "paying as agreed" to
any consumer reporting agency.
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Freddie Mac Requirements – Additional Relief
61
• If a Servicemember or dependent experiences an eligible hardship, such as receipt of PCS
orders, and does not qualify for protection under the provisions of the SCRA or State Military
Relief Laws, or qualifies but chooses to explore other options, the Servicer must evaluate the
Servicemember for the most appropriate relief or workout option in accordance with Chapter 64.
• If a Servicemember requires additional relief beyond what is currently available in the Guide,
Servicers should contact their Freddie Mac representative.
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Freddie Mac Requirements – Interest Rate Cap
If the Servicemember and the mortgage qualify for the SCRA's maximum interest rate protection and the Servicemember has
submitted a written request for protection in accordance with the SCRA, Freddie Mac will:
• For a Servicemember who is a member of a reserve component, begin applying the interest rate cap with the first monthly
mortgage payment due after the Servicemember receives the orders
If the Borrower is delinquent on his or her monthly payments, the Servicer must contact Freddie Mac no later than five
Business Days after receiving the request for interest rate relief.
• For a Servicemember who is a member of the uniformed services or a Servicemember
who belongs to the National Guard, begin applying the interest rate cap with the first
monthly mortgage payment due after the reporting date or effective date of the
Servicemember's Period of Military Service
• Reinstate the Mortgage to its contractual rate of interest beginning with the second
monthly mortgage payment due one year after the date the Servicemember's Period of
Military Service terminates
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Polling Question #4
63
Have you worked with Reservists or National Guard
members in your state?
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Fannie Mae Requirements – Who is Eligible?
• SCRA provides protection and relief to civilians who enter the U.S. military, including members of the
National Guard who are called to active duty by federal authorities
• Mortgage debts are covered under the Act if the borrower was a civilian when he or she became
obligated under the mortgage and subsequently entered the military service, either voluntarily or
involuntarily
• The relief begins when the individual reports for active duty and ends a short period of time after he or
she is separated from active duty
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Fannie Mae Requirements – Foreclosure Relief
• Under SCRA, foreclosure proceedings cannot be commenced or continued against
an eligible Servicemember unless he has given written consent to the proceedings,
the court authorizes commencement of proceedings as a result of its determination
that military service has not materially affected the Servicemember's ability to repay
the debt, or the court authorizes the recommencement of proceedings that were
authorized previously.
• Additionally, the Act requires a stay of foreclosure proceedings and other legal
proceedings on eligible mortgage loans for nine months following the termination of a
Servicemember's active duty effective through December 31, 2012, unless extended
by Congress.
• After the expiration date, servicers are required to limit the granting of a stay of
foreclosure or other legal proceedings to a maximum of 90 days after termination of
active duty.
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Fannie Mae Requirements – Additional Relief
• In some cases, a Servicemember's mortgage may have already been in the process of foreclosure when he commenced active
duty. In others, a servicer may be ready to institute proceedings but has not done so.
• Since these defaults were not related to the Servicemember's entry into active-duty status, the servicer should attempt to
obtain the Servicemember's written agreement to continue or commence foreclosure.
• If the Servicemember does not provide his written agreement, the servicer must either stay any foreclosure that was in process
or postpone the start of foreclosure until it can petition the court to allow the continuation or commencement of proceedings
because the Servicemember's entry into service occurred after the mortgage default and could not have materially affected his
or her ability to pay the past-due debt.
• If permission to foreclose is granted, the servicer should permit the Servicemember's family to continue occupying the property
during the redemption period, paying a reasonable rent, if they are occupying the property at the time of the foreclosure sale.
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Fannie Mae Requirements – Interest Rate Cap
• When the servicer places a mortgage under military indulgence, it agrees to accept
payments of less than the usual monthly installment
• Pursuant to SCRA, if the interest rate exceeds 6%, the monthly installment of P&I owed
must be reduced to reflect interest at 6% while the borrower is in active U.S. military
service
• Once the borrower's active duty status is terminated, the 6% rate cap will be extended
twelve months after the termination of active duty
• Under Fannie Mae's additional forbearance policy, the amount actually paid by the
Servicemember on a current basis may be less than the amount owed, and will vary
according to his or her ability to pay
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FHA Requirements
68
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/qasscra2
HUD makes the following statement at their SCRA Q&A website:
• HUD does not have jurisdiction over interpretation or
enforcement of the SCRA (formerly known as the
Soldiers' and Sailors' Civil Relief Act of 1940)
• As such, lenders are instructed to contact their legal counsel for more information
about their legal obligations with respect to compliance with the Act
• Official HUD policy with respect to servicing of FHA-insured mortgages in relation to
the SCRA is found in HUD handbooks and FHA Mortgagee Letters
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Knowledge Checkpoint Question #4
If the Servicemember already has a mortgage interest rate below 6%, he can waive his
right to this protection.
Is this correct?
Yes.
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FHA Requirements – Who is Eligible?
70
Active duty military personnel:
• 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
• Guardsmen called to active service for more than 30 consecutive days
In limited situations, dependents of servicemembers are also entitled to protections.
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FHA Requirements – Notice
71
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. 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 OneSource 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.
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FHA Requirements – Foreclosure Relief
72
• 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 9 months grace period prior to December 31, 2014 unless they
have the approval of a court.
• After December 31, 2014, the grace period for Service member's 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.
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FHA Requirements – Additional Relief
73
For FHA-insured loans, servicers are required to work with
the surviving family members to consider all applicable loss
mitigation options to save the family home through a
special forbearance plan, loan modification or partial claim,
or avoid foreclosure through a Pre-foreclosure sale or
deed-in-lieu of foreclosure.
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FHA Requirements – Interest Rate Cap
74
• When interest must be reduced to six percent on an FHA-insured loan, the servicer may either calculate interest
due for the period of active duty on a per diem basis, or permit the lower interest rate from the first through the
last month of military service
• If notified that a Servicemember is on active military duty, the servicer must advise the Servicemember of the
adjusted amount due, provide adjusted coupons or billings, and ensure that the reduced payments are not
returned as insufficient
• If the servicer was not notified that the borrower is on active military duty, but receives a reduced payment that
approximates an interest reduction to six percent, an effort should be made to contact the borrower to determine
whether the borrower is on active duty
• If an appropriate explanation is not provided, the servicer may return the insufficient payment
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VA Requirements
75
http://www.benefits.va.gov/HOMELOANS/scra.asp
• Veteran borrowers called up to active duty may be able to request relief pursuant to the Servicemembers Civil
Relief Act (SCRA)
• SCRA is intended to ease the economic and legal burdens on military personnel during their active service
• In order to qualify for certain protections available under the Act, the borrower must request protection under the
Act, and the loan must have originated prior to the current period of active military service
• If you have questions about SCRA, you can either contact your lender directly, or reach a trained VA counselor at
your nearest VA Regional Loan Center toll-free at 877-827-3702.
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USDA Requirements
76
http://www.rurdev.usda.gov/SupportDocuments/3550-2chapter02.pdf
• Mortgage servicers should ensure that their employees are adequately trained about the options available for
homeowners with PCS orders.
• Information provided to homeowners with PCS orders regarding any available assistance options, such as the
programs offered by or through the USDA-RD, should be accurate and readily understandable.
To obtain a reduction to the 6 percent mortgage interest rate, the borrower must submit a written request and a copy of
their mobilization orders to:
USDA, Centralized Servicing Center
FC-244 ATTN: SCRA
P.O. Box 66818
St. Louis, MO 63166-6818
800-349-5097
FAX: 314-457-4545
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CFPB Key Dates Timeline
77
For Servicemembers on active duty, this timeline is suspended.
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Post Foreclosure Options for Servicemembers
78
While there are no special requirements in the military for Servicemembers who
have already lost their homes through foreclosure, be aware there are support
groups for this population.
If a Servicemember believes his/her property was unlawfully foreclosed, he/she
should contact the nearest JAG (Judge Advocate General) office for a consultation.
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Case Studies Ground Rules
These exercises are as much for discussion as they are for education.
Some of you have already been helping Servicemembers, National Guard members and
Reservists.
Please share your best practices in the question box.
Thank you!
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Case Study #1
John got a job as a retail store manager right out of college when he was 21 years old. He moved out of his
parents’ house and into an apartment in a suburb of Philadelphia in November 2004 and has been paying $800 a
month rent. He lives alone. John joined the Army in August 2005 and has now received orders to report to
Fort Benning, Georgia for 14 weeks of One Station Unit Training, OSUT. John wants to let the unit go and put his
furniture in storage. He wants to break his lease which has another three months on it. John’s landlord says John
must continue to pay on the lease.
Does John have the right to terminate his lease?
Yes, because he is leaving on active duty for 14 weeks.
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Case Study #2
Mary is a servicemember stationed in Afghanistan with a pre-military service mortgage loan that is covered under
SCRA. Her bank encouraged her to refinance to an adjustable-rate mortgage to reduce the amount of the
mortgage payment. The payment will be smaller at the beginning, but then will change after a year according to
the index used.
Should Mary take advantage of this offer?
Mary should think carefully about this decision as she has certain protections under the SCRA
for the loan she took out BEFORE she entered active military service that would not apply to a
loan taken out while on active duty.
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Case Study #3
Cathy is a registered nurse in the military. She and her civilian husband, Mike, live in the Tupelo, Mississippi house
Cathy purchased before she joined the military and before she got married. Cathy received orders to work in Hawaii
for two years. Even with the COLA, because Hawaii is an expensive place to live, Cathy defaulted on her mortgage
payments on the Tupelo property in which Mike was living with his mother who is an invalid. Cathy sent a request in
writing to her servicer to reduce the interest rate on her mortgage to 6% from 8.5% and she explained that, even
with the reduction, she still can’t afford the payment. The servicer started foreclosure anyway.
What can Cathy do?
• Contact her JAG office
• File a complaint with the CFPB
• Send an error resolution request to the servicer
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Certification Exam Resources
83
• HUD Housing Counseling Certification (brief summary) – http://useconomy.about.com/od/criticalssues/p/Dodd-Frank-Wall-Street-
Reform-Act.htm
• HUD proposed rule in .pdf format –
http://www.gpo.gov/fdsys/pkg/FR-2013-09-13/pdf/2013-22229.pdf
• HUD Q&A on proposed rule and certification exam –
http://portal.hud.gov/hudportal/documents/huddoc?id=OHC_HCCERTF110613.pdf
• HUD training and certification exam website –
http://www.hudhousingcounselors.com/
• HUD press release about new exam website –
http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-070
• HUD Exchange – https://www.hudexchange.info/
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SCRA Law and Amendments
84
• SCRA Public Law December 19, 2003 – http://www.gpo.gov/fdsys/pkg/PLAW-108publ189/pdf/PLAW-
108publ189.pdf
• Amendment December 10, 2004 in Veterans Benefit Improvement Act of 2004 –
http://www.gpo.gov/fdsys/pkg/STATUTE-118/pdf/STATUTE-118-Pg3598.pdf
• Amendment January 6, 2006 in National Defense Authorization Act for Fiscal Year 2006 –
http://www.gpo.gov/fdsys/pkg/PLAW-109publ163/pdf/PLAW-109publ163.pdf
• Amendment June 15, 2006 in Veterans’ Housing Opportunity and Benefits Improvement Act of 2006 –
http://www.gpo.gov/fdsys/pkg/PLAW-108publ189/pdf/PLAW-108publ189.pdf
• Amendment January 28, 2008 in the National Defense Authorization Act for Fiscal Year 2008 –
http://www.gpo.gov/fdsys/pkg/PLAW-110publ181/pdf/PLAW-110publ181.pdf
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SCRA Law and Amendments
85
• Amendment July 30, 2008 in the Housing & Economic Recovery Act of 2008 –
http://www.gpo.gov/fdsys/pkg/PLAW-110publ289/pdf/PLAW-110publ289.pdf
• Amendment October 10, 2008 in Veterans’ Benefit Improvement Act of 2008 –
http://www.gpo.gov/fdsys/pkg/PLAW-110publ389/pdf/PLAW-110publ389.pdf
• Amendment November 11, 2009 in Military Spouses Residency Relief Act –
http://www.gpo.gov/fdsys/pkg/PLAW-111publ97/pdf/PLAW-111publ97.pdf
• Amendment October 13, 2010 in Veterans’ Benefit Act of 2010 – http://www.gpo.gov/fdsys/pkg/PLAW-
111publ275/pdf/PLAW-111publ275.pdf
• Amendment November 19, 2013 in Military Activities of the DoD for Fiscal Year 2014 –
http://beta.congress.gov/crec/2013/11/19/CREC-2013-11-19-pt1-PgS8202.pdf
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SCRA Resources
86
• Official SCRA website – https://scra.dmdc.osd.mil/
• Official SCRA website FAQs and news – https://scra.dmdc.osd.mil/faq.xhtml
• Armed Forces Legal Assistance Program Offices (JAG) – http://www.military.com/benefits/military-legal-
matters/legal-assistance-and-jag/free-legal-assistance.html
• Servicemember foreclosure support – www.military.com/money/home-ownership/selling-your-home/help-for-
military-families-experiencing-foreclosure.html
• Military OneSource SCRA help 1-800-342-9647 – http://www.militaryonesource.mil/moving?content_id=267394
• Military.com National Guard and Reserves explained – http://www.military.com/join-armed-forces/guard-reserve-
explained.html
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Agency Military Resources
87
• Freddie Mac for military – http://www.freddiemac.com/mortgage_help/military_assistance.html
• Freddie Mac loan lookup – https://ww3.freddiemac.com/loanlookup/
• Fannie Mae for military - http://knowyouroptions.com/find-resources/government-programs/military-options
• Fannie Mae loan lookup – https://www.knowyouroptions.com/loanlookup
• HUD for military – http://www.hud.gov/offices/cpd/about/hudvet/library/scra.cfm
• VA Home Loans SCRA – http://www.benefits.va.gov/HOMELOANS/scra.asp
• USDA for military – http://www.nifa.usda.gov/newsroom/news/2011news/04271_military_families.html
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Agency Military Resources
88
• CFPB Servicemember protections – http://www.consumerfinance.gov/blog/servicemembers-you-have-new-mortgage-
protections-in-2014/
• MHA for military – http://www.makinghomeaffordable.gov/programs/military-resources/Pages/default.aspx
• Homeownership Preservation Foundation for military – http://www.995hope.org/blog/mortgage-relief-for-military-
personnel
• FDIC military – http://www.fdic.gov/news/news/financial/2012/fil12028.html
• CFPB report on Student Loan servicing and the military – http://www.consumerfinance.gov/reports/the-next-front-
student-loan-servicing-and-the-cost-to-our-men-and-women-in-uniform/
• CFPB Guide for Servicemembers on Student Loans – http://files.consumerfinance.gov/f/201405_cfpb_servicemember-
student-loan-guide.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=pressrelease05132014
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Continued Education Hours
89
• 2.0 hours for today’s session
• Must take the short test to receive the Certificate of Completion
• The test link will be sent to you within two hours after the end of this webinar
IMPORTANT! Please add [email protected] to your address book
• Once you pass the test, you can print your certificate right away at the test site
Please complete the survey that will pop up at the end of today’s webinar.
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Upcoming Webinars
90
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Strategic Partnership
• Additional online training events
• Increased resources
• Extended networking opportunities
• More Continued Education Hours
http://www.afcpe.org/
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Self-care for Housing Counselors
94
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Inflight Announcement
• Put on your own mask first before trying to help
someone else
• Counselor wellness experts say that idea has
mileage on the ground, too
• Helping yourself first is a principle that applies
directly to counseling
• “If you’re gasping for air,” you can’t help other
people
93
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Self-Care in 2016
• Your wellness is a critical factor in being a healthy housing/financial counselor
• Each month TCC will review one topic that pertains to self-care for housing counselors
• We will provide resources to help build counselor sustainability
94
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August
Redefine who you are.
Take everything that you have learned and
discovered about yourself and your money
and redefine who you are.
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SCRA – Servicemembers Civil Relief Act
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