Under the just-announced $25 billion national mortgage settlement, members of the military are supposed to have additional protections to guard against wrongful foreclosures. It would seem that the new settlement would bolster the benefits already in place under the Servicemembers Civil Relief Act (SCRA) but that’s not entirely clear.
The issue is this: When must lenders halt foreclosures involving a member of the military who serves in a combat zone? Are copies of orders or a letter from your commanding officer to the loan servicer enough to demonstrate SCRA coverage?
The new mortgage settlement says the paperwork must be “satisfactory” to the loan servicer. That opens a gray area and raises the question: What’s satisfactory? Are there cases where lenders could sidestep SCRA protections?
Attorney Emily G. Miller (no relation) with the law firm of Ballard Spahr, says lenders may want more documentation:
“In our experience, hostile fire/imminent danger pay is typically categorized as a line item on a servicemember’s leave earnings statement. To truly document eligibility, it seems that a servicer would have to request that the borrower submit a leave earnings statement with the itemized hostile fire/imminent danger pay. This creates both a documentation issue and the potential for communication issues.
“Take the example of an enlisted member of the U.S. Navy who receives orders to a ship. The active duty orders are to the ship itself, not to a particular location. A sailor, attached to any one of the fleet vessels based in Norfolk Virginia might deploy 3 or more times to a combat destination during a three year tour on board. None of those deployments are reflected on their traditional ‘military orders.'”
Ms. Miller explains that “an underway deployment may be scheduled in advance to last approximately six months, but a final return date is not set and any deployment can be shortened or extended pursuant to the military’s needs. The return trip works the same way. The sailor is entitled to hostile fire/imminent danger pay until crossing back over into specified waters, at which time normal pay resumes. From this point, the sailor is entitled to foreclosure protection for an additional nine months, unless he or she goes underway to a combat destination again.” (See: The SCRA Paper Chase, April 26, 2011)
As a result of the robo-signing mortgage settlement — which stems from the wholesale use of robo-signed documents — the argument being made is that orders and letters from commanders may not be enough to provide foreclosure protection under SCRA — especially when your place or time of service are unclear or not known in advance. Alternatively, the sole and central purpose of SCRA is to protect VA borrowers and their families, a purpose which should take precedence over any contrary or conflicting language found in the new mortgage settlement.
Meanwhile, if you receive any unusual lender letters, be sure to get legal advice immediately.
Photo courtesy of