Military personnel foreclosure program
Military personnel can greatly benefit from a program that was put into place that helps service members avoid a foreclosure. The Service Members Civil Relief Act is the regulation in place that offers military personnel foreclosure and mortgage help. Find more details on the program below, but the bottom line is that this federal government act protects any active military personnel from losing their home to foreclosure unless the loan servicer can get a court order. It will also reduce the interest rate on their mortgage.
The Service Members Civil Relief Act will help those military service members who have had a mortgage obligation prior to enlisting in the military or prior to them being recalled to active duty. The program applies to all branches, including the Navy, Army, Navy, Marine Corps, Coast Guard, and Air Force. It applies to others who directly support the armed services, and even reservists are eligible to receive assistance.
Type of mortgage help is offered by the Service Members Civil Relief Act
The federal government act will limit and reduce the interest rate on a mortgage. Banks and mortgage lenders need to, if you request it, lower the interest rate on your home loan to no more than six percent per year. This new interest rate will be effective during the period of active military service. The lender will also need to recalculate your new monthly mortgage payments to reflect the lower interest rate on your loan.
It is important to note that you need to request this new, temporary interest rate reduction from your lender. You will not receive it if you do not ask for it. You need to submit a written request to your bank or mortgage lender, and provide them supporting documentation including a copy of your military orders. You have a large window of time in which you can notify your lender. The request can be submitted as soon as your military orders are issued. However the notice does need to be sent to your lender no later than 180 days after the date of your release from active duty military service. So you can even send the letter after you are released from service.
If you have questions on the program, or are facing other foreclosure issues, the US Coast Guard Legal Services provides free legal assistance and representation for families of all military branches. They can advise people on foreclosure and mortgage issues, evictions, help people deal with domestic issues, and much more.
Yes you are protected from a foreclosure filing. Banks and mortgage lenders can’t foreclose on your home while a military service member is on active duty. In addition, they cannot begin foreclosure proceedings up to including up to 90 days after the period of military service ends.
However, there are some exceptions. A lender may be able to still begin the foreclosure process if they have a court order. However, this is a difficult approach for the lender to take, as part of the court proceeding the bank or lender would be required to show that the military service member's ability to repay the mortgage was not affected by his or her military service, which as any person in the military will say is not usually the case.
How long can I get mortgage relief for?
The interest rate reduction that you receive will only be in place for a period of time that someone is in active military service. Other benefits from the Service Members Civil Relief Act, such as a delay of monthly principal payments on the loan and restrictions that will be put into place on foreclosure may begin immediately upon assignment to active military service. The benefits will end on the third month following the term of active duty assignment.
After the program has been ended, your interest rate will reset to the original rate. However, you can always refinance your loan. You will never need to repay any of the debt that was forgiven, and there are no negative tax or credit implications.