For Military Members - Active Duty Only

[Mary Salzer]

Servicemembers Civil Relief Act (SCRA)
Section 207 - Maximum rate of interest on debts incurred before military service


(a) INTEREST RATE LIMITATION-

(1) LIMITATION TO 6 PERCENT- An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.

(2) FORGIVENESS OF INTEREST IN EXCESS OF 6 PERCENT- Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition in paragraph (1) is forgiven.

(3) PREVENTION OF ACCELERATION OF PRINCIPAL- The amount of any periodic payment due from a servicemember under the terms of the instrument that created an obligation or liability covered by this section shall be reduced by the amount of the interest forgiven under paragraph (2) that is allocable to the period for which such payment is made.

(b) IMPLEMENTATION OF LIMITATION-

(1) WRITTEN NOTICE TO CREDITOR- In order for an obligation or liability of a servicemember to be subject to the interest rate limitation in subsection (a), the servicemember shall provide to the creditor written notice and a copy of the military orders calling the servicemember to military service and any orders further extending military service, not later than 180 days after the date of the servicemember's termination or release from military service.

(2) LIMITATION EFFECTIVE AS OF DATE OF ORDER TO ACTIVE DUTY- 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 subsection (a), effective as of the date on which the servicemember is called to military service.

(c) CREDITOR PROTECTION- 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 upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the servicemember's military service.

(d) INTEREST- As used in this section, the term `interest' includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability

Servicemembers Civil Relief Act (SCRA)
Section 303 - Mortgages and trust deeds


(a) MORTGAGE AS SECURITY- This section applies only to an obligation on real or personal property owned by a servicemember that--

(1) originated before the period of the servicemember's military service and for which the servicemember is still obligated; and

(2) is secured by a mortgage, trust deed, or other security in the nature of a mortgage.

(b) STAY OF PROCEEDINGS AND ADJUSTMENT OF OBLIGATION- In an action filed during, or within 90 days after, a servicemember's period of military service to enforce an obligation described in subsection (a), 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--

(1) stay the proceedings for a period of time as justice and equity require, or

(2) adjust the obligation to preserve the interests of all parties.

(c) SALE OR FORECLOSURE- A sale, foreclosure, or seizure of property for a breach of an obligation described in subsection (a) shall not be valid if made during, or within 90 days after, the period of the servicemember's military service except--

(1) upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or

(2) if made pursuant to an agreement as provided in section 107.

(d) PENALTIES-

(1) MISDEMEANOR- A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both.

(2) PRESERVATION OF OTHER REMEDIES- The remedies and rights provided under this section are in addition to and do not preclude any remedy for wrongful conversion otherwise available under law to the person claiming relief under this section, including consequential and punitive damages.

 

[armystan]

As someone who has been active duty military I am not sure whether I fall under this scope or not.. I have a mortgage with Option One and I just received a letter stating my payments will go up about $519.00 which is alot of money. I just submitted paperwork requesting an interest payment freeze hopefully they will approve it...but I do know I will probably have to go to JAG to discuss my options with them and hopefully this will help out.. If anyone has any other advise please post it ..I need all the help I can get..

 

[tjaamom]

My husband is active duty and we have been in our home for 2 years. We bought our house when the housing values were high. We currently have a VA loan that is serviced through Countrywide. I called them today to see if there was any type of program that they have to help with our predicament. In our situation we are upside down on our house. There are identical houses across the street that are selling for half what we still owe on our mortgage. I understand that the market is down all over, but for prices to decrease by half is outrageous. We have never been late on any bills and have excellent credit, but I was told that until I am late and in jeopardy of foreclosure that there is nothing they could do. We will have to PCS in 2 years and I know for a fact that we will not be able to sell the house for what we owe. My neighbor down the street is with Wells Fargo and the are going to refinance her loan at the current home value. Has anyone heard of this? I could handle if the values were down 10-15%, but 50% is ridiculous. Does anyone have any solutions or information? All help is appreciated.

 

[schwefls]

Welcome to our fourm tjaamom:

I wanted to stop in say hello and assure you, you are no alone. Shortly someone will be reaching out to you with some sound advice/suggestions. In the interim please hang in there and know that we are here for you. My thanks to your husband for serving our country.

 

[armystan]

Sorry to hear of your problems you are having. However, with a VA Loan there might be some help. First off, have you contacted the VA at all? If you have not might I suggest you call them ASAP? Also I went on their website and found this article...

VA Reaching Out to Vets with Mortgage Problems - Public and Intergovernmental Affairs

WASHINGTON – Many home owners have found it difficult recently to pay their mortgages, but quick intervention by loan counselors at the Department of Veterans Affairs (VA) has actually reduced the number of veterans defaulting on their home loans. “VA is reaching out to veterans -- both those who use our home-loan guaranty program and those who don’t take advantage of our guaranties -- to keep people in their homes,†said Secretary of Veterans Affairs Dr. James B. Peake. “I’m proud of our solid record of success in helping veterans and active-duty personnel deal with financial crises.†Accounting for much of this success are VA counselors at nine regional loan centers who assist people with VA-guarantied loans avoid foreclosure through counseling and special financing arrangements. The counselors also can assist other veterans with financial problems. VA counselors have helped about 74,000 veterans, active-duty members and survivors keep their homes since 2000, a savings to the government of nearly $1.5 billion. Depending on a veteran’s circumstances, VA can intercede with the borrower on the veteran’s behalf to pursue options -- such as repayment plans, forbearance, and loan modifications -- that would allow a veteran to keep a home. To obtain help from a VA financial counselor, veterans can call VA toll-free at 1-877-827-3702. Information about VA’s home loan guaranty program can be obtained at www.homeloans.va.gov.​

Since 1944, when home-loan guaranties were offered with the original GI Bill, VA has guarantied more than 18 million home loans worth $911 billion. Last year, about 135,000 veterans, active-duty service members and survivors received loans valued at nearly $24 billion. About 2.3 million home loans still in effect were purchased through VA’s home-loan guaranty program, which makes home loans more affordable for veterans, active-duty members and some surviving spouses by protecting lenders from loss if the borrower fails to repay the loan. More than 90 percent of VA-backed home loans were given without a downpayment. April data shows that foreclosures are down more than 50 percent from the same months in 2003. VA attributes this to prudent credit underwriting standards, its robust supplemental loan servicing program and VA financial loan counselors.

Believe it or not, I have found out there are other military members that are having the same problems as you do. There is no shame it happens to us all. Countrywide Loan are a bunch of yahoo's...Please call the VA and keep us informed...Good luck

Army Stan

 

[armystan]

I found another article on the Federal Reserve website that gives additional information

FRB: Foreclosure Resources for Consumers

 

[tetee]

As a former dependent wife of a US Air Force member living 15 years on military bases and two sons currently in the ARMY one a junior at West Point and one a West Point graduate currently in Iraq.I pray for all military members in this situation to be helped asap. I am currently in a situation trying to modify my interest rate.But I pray that what you are all doing for our country is recongnized and you are all helped. Thanks for all you do for the USA.

 

[Serf_]

The key to the 6% cap for the SCRA is its pre service nature. If the servicemember had the debt before they entered the service, they should be eligible for the 6% cap.

However, the 6% cap also applies to reservists in some situations. If a service member is called to active duty, they are eligible for the 6% cap while they are mobilized, and possibly for a period after they return home. For more information, contact your unit's JAG or legal assistance office.

 

[usmc2736]

Question...what if the loan was taken out while he is active duty at a higher percentage? - can we now ask for the 6% cap? Im a little confused by the language in the law.

 

[Spinderella95]

Man, what a mess....

Bought a house, at the top of the bubble, in Delaware May 2006 due to hubby's PCS to Naval Yard, DC. Bottom drops out of market, and now that $365K house is worth ~$260K. We get orders to Everett, WA in Feb 2010. No hope of selling the house, so we decide to rent it while "waiting for the market to recover"....at a $1000 loss/month....plus taxes, insurance, HOA fees, yearly sewer bill, etc. Tenant moves out and leaves $4K in damages, plus routine maintenance that needs to be done. Obviously, we decide not to rent it out again. A week later (Aug of this year) Hurricane Irene helps remove part of the roof....have to hire a "property manager" to help coordinate the tenant repairs, and now a roofing contractor. Spend $6K in the last 3 months completing all the repairs (plus paying the property manager, the mortgage, electricity, water, etc which all had to be turned back on to do the repairs). Add another $1K for the insurance deductible on the roof.....all this to try to get the house ready to go on the market as a short sale (yeah, explain the logic of SPENDING $7K on a house that you're about to take a $100K hit on?!?!?)

And to top it all off??? A letter from the insurance company, two days ago, canceling our homeowners insurance, not because we made a claim, but because the house is vacant.......really. Got the quote for a "vacant home" policy today...$3K (we were paying $450/yr when we lived in the home)

We're done. Walking away. Will make sure the contractor gets paid for his work, then the mortgage company will get a box with a set of keys and an "FU" letter. We've called them several times over the last 2 years to try to find a logical way out of this. Because 1) we aren't delinquent and 2) we can, technically, afford the payments they won't even talk to us (they don't care that we have no emergency fund, no savings, no vacations, crazy credit card debt from trying to float all this, and no retirement savings).

They can take my very nice credit score and shove it where the sun don't shine. My sanity is worth more than any credit score is and the stress and financial hardship this has caused is just not worth it.

Have already sent in a packet to the HAP program. They want a whole lot more paperwork, and we still won't know if we're "eligible" until we have a signed buyers agreement!! Then they couch their letter with letting any potential buyer (if we were to short sale as planned) know that it can take them 60days to approve our sale (not to mention the 60-180 bank turnaround time to approve the short sale) "IF" we are eligible....and "only if funds are available". So basically, even if we had a buyer tomorrow, that buyer would have to wait a minimum of 60 days on TWO bearucratic entities, and EITHER of them could turn the deal down. Forget it. I'll take my lumps.

The loss of the homeowners insurance was the last straw. I'm not spending another $3K on the house, and I'm not going to let random people run around in it (realtors and buyers) without it. The mortgage company can deal with it. I'm out.