servicemembers civil relief act - constant...

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www.thecounselorscorner.net “Online Training Done Right”

August 25, 2016

SCRA –Servicemembers Civil Relief Act


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

http://www.thecounselorscorner.net


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06-23-16


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


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


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.



mailto:[email protected]

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06-23-16


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!


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


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.



http://portal.hud.gov/hudportal/documents/huddoc?id=76101HSGH.pdf

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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.


Polling Question #1

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Have you heard of SCRA –

the Servicemembers Civil Relief Act?



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www.thecounselorscorner.net “Online Training Done Right” 1314


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


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


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


https://www.gpo.gov/fdsys/pkg/USCODE-2013-title32/html/USCODE-2013-title32.htm

https://www.law.cornell.edu/uscode/text/10/12304


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Is Your Client on Active Duty?

https://scra.dmdc.osd.mil/single_record.xhtml


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.


https://scra.dmdc.osd.mil/single_record.xhtml


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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.


Financial Capability Study

22

http://www.usfinancialcapability.org/resultsm.php



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.


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


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


https://www.federalregister.gov/articles/2016/02/09/2016-02445/publication-of-housing-price-inflation-adjustment


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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.


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


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


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?


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


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


http://www.nonprofitlawblog.com/assets/6a00d834558ca469e20192ab9ca12e970d-pi

http://www.nonprofitlawblog.com/assets/6a00d834558ca469e20192ab9ca12e970d-pi


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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



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.


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


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.


http://www.military.com/spouse/military-relocation/pcs-moves/servicemember-and-family-voting.html


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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


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

45

§ 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


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

48

• 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.


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


Mortgages and Trust Deeds (Original)

52

• 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

53

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


How Many Mortgages are SCRA-eligible?

54

http://www.gao.gov/products/GAO-14-221


http://library.clerk.house.gov/reference-files/PPL_110_289_HousingandEconomicRecovery_2008.pdf

http://veterans.house.gov/HR1627

https://www.govtrack.us/congress/bills/111/s4058

https://www.govtrack.us/congress/bills/113/s3008/text

https://www.congress.gov/bill/114th-congress/senate-bill/2393


http://www.gao.gov/products/GAO-14-221

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6% Mortgage Interest Rate Cap

55

• 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


6% Mortgage Interest Rate Cap

56

§ 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



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.


True.



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06-23-16


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


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.


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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06-23-16


Polling Question #4

63

Have you worked with Reservists or National Guard

members in your state?


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.


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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06-23-16


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


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



http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/qasscra2

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06-23-16



If the Servicemember already has a mortgage interest rate below 6%, he can waive his

right to this protection.

Is this correct?

Yes.


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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06-23-16


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.


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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06-23-16


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.


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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06-23-16


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.


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



https://www.google.com/search?biw=1280&bih=632&tbm=isch&q=veterans+administration+hospital&revid=953294603

https://www.google.com/search?biw=1280&bih=632&tbm=isch&q=veterans+administration+hospital&revid=953294603


http://www.rurdev.usda.gov/SupportDocuments/3550-2chapter02.pdf

http://www.google.com/imgres?imgurl=http://oklahomafarmreport.com/wire/news/2011/07/media/02164_USDA_RD_logo.jpg&imgrefurl=http://oklahomafarmreport.com/wire/news/2011/07/02163_RuralDevelopRegs07192011_090936.php&h=400&w=775&tbnid=_aLa7DF7rrK5hM:&zoom=1&docid=VJKRQB1Uux1imM&ei=wQ9wU9CqH46yyASEzIGYAQ&tbm=isch&ved=0CHcQMygdMB0&iact=rc&uact=3&dur=213135&page=3&start=27&ndsp=18

http://www.google.com/imgres?imgurl=http://oklahomafarmreport.com/wire/news/2011/07/media/02164_USDA_RD_logo.jpg&imgrefurl=http://oklahomafarmreport.com/wire/news/2011/07/02163_RuralDevelopRegs07192011_090936.php&h=400&w=775&tbnid=_aLa7DF7rrK5hM:&zoom=1&docid=VJKRQB1Uux1imM&ei=wQ9wU9CqH46yyASEzIGYAQ&tbm=isch&ved=0CHcQMygdMB0&iact=rc&uact=3&dur=213135&page=3&start=27&ndsp=18

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06-23-16


CFPB Key Dates Timeline

77

For Servicemembers on active duty, this timeline is suspended.


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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06-23-16


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!


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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06-23-16


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.


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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06-23-16


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/


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 –


• Amendment January 28, 2008 in the National Defense Authorization Act for Fiscal Year 2008 –



http://useconomy.about.com/od/criticalssues/p/Dodd-Frank-Wall-Street-Reform-Act.htm

http://www.gpo.gov/fdsys/pkg/FR-2013-09-13/pdf/2013-22229.pdf

http://portal.hud.gov/hudportal/documents/huddoc?id=OHC_HCCERTF110613.pdf

http://www.hudhousingcounselors.com/

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-070

https://www.hudexchange.info/



http://www.gpo.gov/fdsys/pkg/STATUTE-118/pdf/STATUTE-118-Pg3598.pdf




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SCRA Law and Amendments

85

• Amendment July 30, 2008 in the Housing & Economic Recovery Act of 2008 –


• Amendment October 10, 2008 in Veterans’ Benefit Improvement Act of 2008 –


• Amendment November 11, 2009 in Military Spouses Residency Relief Act –


• 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


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






http://beta.congress.gov/crec/2013/11/19/CREC-2013-11-19-pt1-PgS8202.pdf


https://scra.dmdc.osd.mil/

https://scra.dmdc.osd.mil/faq.xhtml

http://www.military.com/benefits/military-legal-matters/legal-assistance-and-jag/free-legal-assistance.html

http://www.military.com/money/home-ownership/selling-your-home/help-for-military-families-experiencing-foreclosure.html

http://www.militaryonesource.mil/moving?content_id=267394

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


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


http://www.freddiemac.com/mortgage_help/military_assistance.html

https://ww3.freddiemac.com/loanlookup/

http://knowyouroptions.com/find-resources/government-programs/military-options

https://www.knowyouroptions.com/loanlookup

http://www.hud.gov/offices/cpd/about/hudvet/library/scra.cfm


http://www.nifa.usda.gov/newsroom/news/2011news/04271_military_families.html


http://www.consumerfinance.gov/blog/servicemembers-you-have-new-mortgage-protections-in-2014/

http://www.makinghomeaffordable.gov/programs/military-resources/Pages/default.aspx

http://www.995hope.org/blog/mortgage-relief-for-military-personnel

http://www.fdic.gov/news/news/financial/2012/fil12028.html

http://www.consumerfinance.gov/reports/the-next-front-student-loan-servicing-and-the-cost-to-our-men-and-women-in-uniform/

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.


Upcoming Webinars

90


mailto:[email protected]


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06-23-16


Strategic Partnership

• Additional online training events

• Increased resources

• Extended networking opportunities

• More Continued Education Hours

http://www.afcpe.org/


Self-care for Housing Counselors

94


http://www.afcpe.org/


47

06-23-16


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


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



48

06-23-16


August

Redefine who you are.

Take everything that you have learned and

discovered about yourself and your money

and redefine who you are.

95




49

06-23-16

www.thecounselorscorner.net 97

SCRA – Servicemembers Civil Relief Act

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