Military Foreclosures:

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Military Foreclosures Assessment,
Response Servicemembers Civil Relief Act
COL Shawn Shumake Director of Legal
Policy DUSD-PI/LP August 25, 2008 703-697-3387 da
vid.shumake_at_osd.mil
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Overview

• Assessment of the Problem
• National
• Military
• Media Distortions
• DMDC Data
• Anecdotal Service Reports
• Relief Societies
• Military OneSource
• Most Significant Impact
• Services Available
• Legal Protections
• What DoD has Done
• What the Services Can Do
• Servicemembers Civil Relief Act A Brief Look

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Assessment General Public

• 1st Q 2008 1/194 households foreclosure filing
• 112 increase from 1st Q 2007
• 23 increase from previous quarter
• 2nd Q 2008 1/171 household foreclosure filing
• 121 increase from 2nd Q 2007
• 14 increase from previous quarter

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Assessment Military

• Media Reports
• Distortions Foreclosures in Military Towns
  Surge at Four Times US Rate (Bloomberg.com)
• Based on w/in 10 miles of 10 military cities
• Based only on 10 worst of 28 military cities
• False Assumptions/Implications
• What is a military city?
• A Different Perspective (Christian Science
  Reporter)
• Economic Hardship Indicator Military towns
  scored favorably

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Assessment Military (cont)

• Service Reports Legal Assistance Offices
• Some increases noted, but not remarkable
• Relief Societies
• No significant concerns raised
• Military OneSource Calls
• Approx 3 of calls (Jan-May) buying or selling a
  home

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Assessment Military (cont)

• Most Significant Military Impact
• Rental Comparisons
• Military vs. General Public 25 vs. 68
• Landlords face foreclosure
• Impact of Frequent PCSs

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Services Available

• Military Legal Assistance Offices
• http//legalassistance.law.af.mil/content/locator.
  php
• Military OneSource (1-800-342-9647)
• 24/7 world-wide assistance, on-line, phone
• Telephonic financial counselors, face-to-face on
  request
• Counseling Services
• Department of Housing and Urban Development
  (1-800-569-4287)
• Tips to avoid foreclosure http//www.hud.gov/fore
  closure/
• Hope Now (1-888-995-4673)
• http//www.hopenow.com

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Legal Protections

• Renters Relief
• Military tenant faces eviction when landlord
  foreclosed on
• Local move at government expense authorized 30
  Jul 08
• Housing and Economic Recovery Act of 2008 (HERA)
• Lender Notification Requirements
• 12 USC 1701x SCRA fact sheet
• OneSource
• Servicemembers Civil Relief Act -- Fact Sheet
• Http//www.militaryonesource.com/skins/MOS/home.as
  px

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Legal Protections Servicemembers Civil Relief
Act (50 USC app.)

• SCRA Protections
• Stay Provisions -- 202
• Cannot be evicted without a VALID court order
  (rentlt2831.13) -- 531
• Protections against foreclosure -- 533
• Extended from 3 to 9 months ( 2203, HERA)
• 6 interest Cap (only applies to pre-service
  obligations) -- 527
• Bifurcation of 6 cap to apply for one year after
  AD for foreclosures ( 2203, HERA)

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DoD Efforts

• Gathered Anecdotal Service Assessments of Impact
• Modified DMDC Questionnaires
• Amended the JFTR to Reflect Authority for Local
  Moves
• Informed
• Coordinated w/ Service Chiefs of Legal
  Assistance/OTJAGs
• Explored Foreclosure Classes at Army JAG School
• Promoted Availability of Counselors
• OneSource
• E-mail to every Service member on Active Duty (15
  Sep 08)
• LES notification
• MyPay notification
• Examined possible HUD-certification of Military
  OneSource Counselors

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DoD Efforts (cont)

• DoD Financial Roadshow
• CMDR Dave Julian

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Service Efforts

• What Can the Services Do?
• Educate - Get the Word Out
• What resources are available to help?
• Overcome stigma that may delay asking for help
• Building ties between Community Services/JAG
• What programs/laws are available to help?
• Leveraging community assets
• Encourage preventive law initiatives
• Implement Counseling Requirements
• Section 2202, Housing and Economic Recovery Act
• Advise SM returning from active duty abroad how
  to avoid foreclosures

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Service Efforts (cont)

• What Can the Services Do?
• Retain Higher BAH Rate of Former Permanent Duty
  Station
• JFTR U10402, para. B6
• The secretary concerned may determine
  circumstances that require dependents to reside
  separately and authorize/approve BAH based on .
  . . the old PDS.

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Service Efforts (cont)

• What Can the Services Do?
• Re-look Homestead / tour extensions policy
• Consider case-by-case tour extensions for
  housing-related difficulties
• Temporarily house displaced families on the
  installation
• Make Dining Facilities available to families

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Concern, but not Crisis

• Continued Assessment
• Education Emphasis
• Services engaged

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PURPOSES OF THE SCRA

• to provide for, strengthen, and expedite the
  national defense through protection extended by
  this Act to servicemembers of the United States
  to enable such persons to devote their entire
  energy to the defense needs of the Nation and
• to provide for the temporary suspension of
  judicial and administrative proceedings and
  transactions that may adversely affect the civil
  rights of servicemembers during their military
  service.

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SUPREME COURT ON SSCRA

• Protect those who have been obliged to drop
  their own affairs to take up the burdens of the
  nation.
  
• Boone v. Lightner 319 U.S. 561, 575 (1943)
• The Act should be read with an eye friendly to
  those who dropped their affairs to answer their
  countrys call.
• Le Maistre v. Leffers 333 U.S. 1, 6 (1948)

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STAY PROVISIONS 522

• Temporary delay in civil actions until
  servicemember can appear
• During period of service plus 90 days, and
• Servicemember has received notice of proceeding
• Automatic 90 day stay if
• SM shows military duty materially affects ability
  to appear, and date when can appear
• Commanding officer writes letter stating duty
  prevents appearance and leave not authorized

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MAXIMUM RATE OF INTEREST 527

• PRE-SERVICE loans incurred by SM, or SM and
  spouse jointly
• But not guaranteed student loans
• (20 USC 1078(d))
• Bifurcated Coverage
• During period of active service, but . . .
• For mortgage type obligations, coverage extends 1
  year beyond
• active service - 2203 HERA
• Cap of 6 per annum all excess FORGIVEN
• Recompute payments at 6 rate
• Cap may be rescinded if creditor shows no
  material effect
• SM must give written notice with copy of orders

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EVICTIONS DISTRESS 531

• Can ONLY evict upon court order no self-help
• Applies to SM or dependents
• Residential rent does not exceed 2,400/mo (in
  2003) (inflation adjusted to 2,831.13 in 2008)
• Ability to pay materially affected by service
• Court SHALL stay for minimum 90 days, or adjust
  the lease obligations
• Criminal sanctions for violation
• Dependents have right to invoke

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INSTALLMENT CONTRACTSFOR PURCHASE OR LEASE
532

• In event of breach of contract, no termination or
  repossession of property without court order
• Applies to pre-service obligation
• Purchase, lease, or bailment of real or personal
  property
• Payment or deposit made prior to service
• Misdemeanor offense for violation
• After hearing, a court may order repayment to SM
  to terminate contract, or
• SHALL stay the proceeding if SMs ability to
  comply is materially affected and SM applies
  length of stay determined by Court
• May stay on courts own motion

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MORTGAGE FORECLOSURE PROTECTION 533

• Similar protection as for installment contracts
  and leases under 532, but applies to
  obligations on real or personal property secured
  by a mortgage
• Applies to pre-service obligations
• Applicable period of service 90 days
• Court may stay proceedings or adjust obligation
  upon showing of material effect

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TERMINATION OF VEHICLE LEASES535

• Pre-service vehicle leases
• If SM is called up or enters service for 180 days
  or more or
• Vehicle lease executed after service commences if
  SM receives orders
• For permanent change of station outside
  continental US, or
• For deployment for 180 days or more
• Notice of termination must be in writing,
  delivered to lessor (or lessors agent or
  grantee) along with copy of military orders (by
  hand, mail or FedEx)
• No need for military clause

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CERTIFICATES OF SERVICE 582

• A Certificate of the Service Secretary shall be
  prima facie evidence as to all aspects of a
  persons military service, or non-service.
• Such a certificate shall be furnished upon
  application (to each service) SUGGESTION --
  use DMDC website
• https//www.dmdc.osd.mil/scra/owa/scra.home
• A SM missing in action is presumed to continue in
  service until accounted for.

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DMDCCertificate of Military Service
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