E7-5412. Mortgage and Foreclosure Rights of Servicemembers Under the Servicemembers Civil Relief Act: Informational Notice

AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION:

Notice.

SUMMARY:

This notice provides information regarding the homeowner notification requirement of section 106(c)(5) of the Housing and Urban Development Act of 1968. The Servicemembers Civil Relief Act (SCRA) provides legal rights and protections that are applicable to the debts of servicemembers and their dependents. Notice is to be provided to all homeowners who are in default in order to inform them of mortgage and foreclosure rights available to them under the SCRA if they are servicemembers or dependents of servicemembers. HUD has developed, in consultation with the Departments of Defense and Treasury, a final disclosure form to be used by mortgagees for fulfilling this notice requirement. HUD made the form available on its website in July 2006, and the form is also attached as an appendix to this notice.

FOR FURTHER INFORMATION CONTACT:

Leslie Bromer, Mortgage Servicing Specialist, Asset Management and Disposition Division, Office of Single Family Housing, Office of Housing, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 9180, Washington, DC 20410-8000; telephone [phone] (this is not a toll-free number). Individuals with speech or hearing challenges may access this number through TTY by calling the toll-free Federal Information Relay Service at [phone].

Questions regarding this notice may also be directed to the National Servicing Center in Oklahoma City, Oklahoma, at [phone]. Individuals with speech or hearing challenges may access this number through TTY by calling the toll-free Federal Information Relay Service at [phone].

SUPPLEMENTARY INFORMATION:

I. Background

The Servicemembers Civil Relief Act (50 U.S.C. app. 501 et seq.) (SCRA) provides various protections to active duty military members and reservists, or members of the National Guard called to active duty, and, in limited situations, dependents of military members. The SCRA is intended to ease the economic and legal burdens on military personnel by postponing, suspending, or mitigating obligations, such as mortgage payments and foreclosure actions. Section 688 of the National Defense Authorization Act for Fiscal Year (FY) 2006 (Pub. L. 109-163, approved January 6, 2006) (NDAA) amended the required content of notifications of homeownership counseling availability under section 106(c)(5)(A)(ii) of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) and directed HUD to issue a final disclosure form to be used by mortgagees in fulfilling the notice requirement.

II. HUD Notice of Servicemembers Rights Under SCRA

Pursuant to the NDAA amendment, HUD has developed, in consultation with the Departments of Defense and Treasury, the final disclosure form for the required notice of servicemember rights. The form is located in the appendix to this notice. The form was also earlier made available on HUD's Web site in July 2006 and can be found at http://www.hudclips.org/​sub_​nonhud/​html/​pdfforms/​92070.pdf. All mortgage loans, including conventional mortgages and mortgages insured by HUD, are subject to the notification requirement. The notice is required to: (1) Be sent to all homeowners who are in default on a residential mortgage; (2) include the toll-free Military OneSource number (800-342-9647) to call if servicemembers or their dependents require further assistance; and (3) 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.

III. Rights and Protections Under the SCRA

The SCRA provides, among other things, that a debt incurred by a servicemember, or by a servicemember jointly with a spouse, prior to entering military service, shall not bear interest at a rate above six percent during the period of military service. (See section 207(a)(1) of SCRA.) Servicemembers become eligible for the interest rate limitation by providing to the creditor with written notice, a copy of the military orders calling the servicemember to active duty, and any orders further extending military service, not later than 180 days after the date of the servicemember's termination or release from military service. (See section 207(b)(1) of SCRA.) Upon receipt, the creditor must limit interest on the obligation to no more than six percent per year, effective as of the date on which the servicemember is called to military service. (See section 207(b)(2) of SCRA.) Only a court may grant the creditor an exception to the interest rate limitation, which may only be granted if in the opinion of the court the ability of the servicemember to pay interest on the obligation or liability at a rate in excess of six percent per year is not materially affected by reason of the servicemember's military service. (See section 207(c) of SCRA.)

In a legal action to enforce a debt against real estate that is filed during, or within 90 days after the servicemember's military service, a court may stay the proceedings for a period of not less than 90 days or may adjust the debt. (See section 202(b)(1) of SCRA.) In addition, the sale, foreclosure, or seizure of real estate shall not be valid if it occurs during or within 90 days after the servicemember's military service unless the creditor has obtained a court order approving the sale, foreclosure, or seizure of the real estate. (See section 303(c) of SCRA.)

In addition to the rights described above, the SCRA provides some additional legal protections. HUD, however, is not in a position to interpret or provide information on all of the various provisions of the SCRA as they may affect the rights afforded creditors and servicemembers. Such interpretations should be obtained for the Department of Defense or should be determined by the courts.

IV. Verification of Military Service

Creditors who are otherwise unable to verify a debtor's military status may request and obtain a statement as to military service from the Department of Defense, pursuant to section 602 of the SCRA (50 U.S.C. app. 582). To facilitate SCRA searches, the Department of Defense's Manpower Data Center (DMDC) has developed a secure public internet access system through which any requester can quickly determine whether an individual is currently in the armed forces. The Web site for SCRA queries is http://www.dmdc.osd.mil/​owa/​scra/​home. The requester must provide the Social Security Number (SSN) and a last name. First name, middle name, birth year, and birth month are optional.

A report is executed by clicking the “LookUp” tab on the query form. If the provided SSN and other identifying information match the name of a person currently on active duty, the DMDC response report will provide the named individual's branch of military service and “begin date” of Active Duty status. If the provided SSN is matched to the name of a person on active duty but the last name and/or birth date entered do not match the information recorded for that individual, the DMDC response report page states, “Based on the social security number you have provided, the individual is currently on Active Duty. However, the name or partial DOB, or both provided do not match the individual against whom the social security number is assigned.” If the DMDC does not have information regarding whether the name of the identified person is on active duty, the response report will only list the supplied name with the text, “Based on the information you have furnished, the DMDC does not possess any information indicating the individual is currently on active duty.”

There is no charge for the online SCRA queries and no authorization, user ID, or password is required. Requesters needing assistance may fax a request for a statement as to military service to DMDC at [phone], or call [phone].

V. Paperwork Reduction Act Statement

The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0565. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

Dated: March 16, 2007.

Brian D. Montgomery,

Assistant Secretary for Housing—Federal Housing Commissioner.

Appendix

United States Department of Housing and Urban Development Servicemembers Civil Relief Act Notice

Legal Rights and Protections Under the SCRA

Servicemembers on “active duty” or “active service,” or a dependent of such a servicemember may be entitled to certain legal protections and debt relief pursuant to the Servicemembers Civil Relief Act (50 U.S.C. App. 501, et seq.) (SCRA).

Who May Be Entitled to Legal Protections Under the SCRA

• Active duty members of the Army, Navy, Air Force, Marine Corps, Coast Guard, and active service National Guard;
• Active service members of the commissioned corps of the National and Atmospheric Administration;
• Active service members of the commissioned corps of the Public Health Service;
• United States citizens serving with the armed forces of a nation with which the United States is allied in the prosecution of a war or military action; and
• Dependents of the above (e.g., spouse or children).

What Legal Protections Are Servicemembers Entitled to Under the SCRA?

• The SCRA states that a debt incurred by a service member, or spouse jointly, prior to entering military service shall not bear interest at a rate above 6 percent during the period of military service.
• The SCRA states that in a legal action to enforce a debt against real estate that is filed during, or within 90 days after the servicemember's military service, a court may stop the proceedings for a period of time, or adjust the debt. In addition, the sale, foreclosure, or seizure of real estate shall not be valid if it occurs during, or within 90 days after the servicemember's military service unless the creditor has obtained a court order approving the sale, foreclosure, or seizure of the real estate.

How Does a Servicemember or Dependent Request Relief Under the SCRA?

• A servicemember or dependent, or both, may request relief under the SCRA by providing the lender a written notice with a copy of the servicemember's military orders. (Note: Lender should place its name, address, and contact information here.)

How Does a Servicemember or Dependent Obtain Information About the SCRA?

• The U.S. Department of Defense's information resource is “Military OneSource.” Web site: http://www.militaryonesource.com

The toll-free telephone number for Military OneSource are:

○ From the United States: 1-800-342-9647.

○ From outside the United States (with applicable access code): 800-3429-6477.

○ International Collect (through long distance operator): 1-484-530-5908.

• Servicemembers and dependents with questions about the SCRA should contact their unit's Judge Advocate, or their installation's Legal Assistance Officer. A military legal assistance office locator for each branch of the armed forces is available at http://legalassistance.law.af.mil/​content/​locator.php.