Servicemembers Civil Relief Act and Mortgage Foreclosure
If you are active duty military and facing foreclosure, you may have additional options available to you. The Servicemembers Civil Relief Act (formerly known as the Soldiers & Sailors Civil Relief Act) was written to temporarily protect active duty military personnel from many civil actions. A later provision extended that protection to dependents of active duty military personnel.
The purpose the statute is to ensure that military personnel and their dependents do not suffer economic hardship and loss of security as a result of the service member's active duty. The act does not define "dependent" and courts have extended the protection to person's actually dependent upon the service member for maintenance and support, even if that person might not qualify as a legal dependent.
Two provisions of the Act may be of particular interest to active duty military personnel or their dependents facing foreclosure:
- If an obligation secured by real property originated before the period of military service and the service member is still obligated, the service member is entitled to a stay of the proceedings "for a period of time as justice and equity require" and any adjustments to the obligation necessary to "preserve the interests of all parties". For this provision to apply, the military service member's ability to comply with the obligation must be materially affected by his/her military service.
- Interest rates for service members are limited. This applies to obligations incurred prior to the period of military service, even if they initially carried a higher interest rate. There are two important qualifications, though: the service member must provide written notice to the creditor along with a copy of his military orders, and the creditor may be granted relief from the limitation if the creditor demonstrates to the court that the service member's ability to pay interest at the regular rate is not materially affected by his/her military service.
The Servicemembers Civil Relief Act affords many economic protections to active duty military personnel, and many service members lose out on these benefits simply because they are not aware of them or don't know how to take advantage of them.