The Servicemembers Civil Relief Act can be a critical ally when dealing with large loan payments or seeking financial protection when duty interferes with pre-existing contracts.
Much of the recent SCRA news centers around personal and student loans, though it’s definitely applied to mortgages or during foreclosure proceedings.
What home-related benefits does the law offer, and how do they take effect? Here’s a snapshot:
1. Foreclosure protection. Service members cannot lose their home to foreclosure while on active duty, or within a year after being on active duty, unless the lender obtains a court order. This overrules some state laws which don’t require a court order for foreclosures. It's the lender's responsibility to check a DoD database to find out whether the borrower is on active duty.
2. Eviction protection. Similar to foreclosure proceedings, landlords generally can’t evict a service member while he or she is on active duty or within 12 months after active-duty service. There are some caveats: The home in question must be the member’s permanent residence (or intended permanent residence, in cases of deployment or other duties), and there is a maximum rent limit ($3,451 in 2016, with annual adjustments for housing inflation). Also, if the property is “subject ... to a distress during the period of military service,” per the law, the renter can be kicked out.
3. Mortgage protection. As with other loans incurred prior to military service, members are eligible to have their pre-service mortgage rate lowered to 6 percent. This does not apply to loans taken out after service begins, and given average mortgage rates over the past decade, it may not apply to a majority of borrowers.
4. Notice not necessary. Service members are covered under the SCRA regardless of whether their landlord, banker or other agent knows that they are in service or intend to join up. Service members must provide these agents with their military orders as proof that the law applies, however, and must notify the agents
5. Fine print. In reality, it’s “not-fine print”: The law allows service members to sign away their protections in some circumstances, but such an agreement must be made separate from the transaction in question, and “[a]ny waiver in writing of a right or protection ... that applies to a contract, lease, or similar legal instrument must be in at least 12 point type.”
6. Starting the process. Find out here if you’re covered, then find your nearest legal services office here.
Kevin Lilley is the features editor of Military Times.