Servicemembers: How the Civil Relief Act Can Help You Save Your Home

The Servicemembers Civil Relief Act performs an invaluable service by providing a series of financial safeguards for active-duty members of the U.S. military and their families. The Act, which is an expanded update of the Soldiers’ and Sailors’ Civil Relief Act passed in 1940, covers fiscal and civil obligations such as:

  • Credit card debt
  • Mortgage payments
  • Apartment and rental home leases

By protecting servicemembers and their families from adverse creditor actions, the SCRA allows them to focus their attention on the defense of the nation.

Overview of Mortgage Protections

In most cases, the SCRA prevents lenders from foreclosing on a property due to unpaid mortgage debt while a servicemember is on active duty and for up to nine months after their discharge. Mortgage interest rates are also capped at 6% during their time of active military service, with required payments being adjusted accordingly.

This interest rate reduction, which can be done with both conventional and government-insured mortgages, will be applied when you send a written request to your lender, along with a copy of your military orders. If the reduced interest rate isn’t enough to keep your mortgage payments current and you are at risk of foreclosure, other mortgage protections may apply.

Overview of Foreclosure Protections

If you took out the mortgage before going on active duty, your lender may not foreclose during or one year after your period of military service unless they receive a court order approving the foreclosure or you provide a written waiver allowing it to foreclose.

If the mortgage was obtained after you started active duty, your lender can’t generally get a default judgment against you in a judicial foreclosure action. If neither you nor your attorney appears in court, a foreclosure can’t proceed unless you provide the lender with a written waiver or the court appoints an attorney to protect your interests.

In the latter case, your court-appointed attorney will usually seek a minimum 90-day stay of proceedings if:

  • There may be a defense but it requires your presence to present OR
  • The attorney cannot contact you to determine if a defense exists

If you cannot be located, it is important to remember that you are not bound by any actions the court-appointed attorney takes on your behalf, nor is there a waiver of any defense you may have.

If the court enters a default judgment against you while you are on active duty or within 60 days after your discharge, you may be able to reopen the matter if you file the request no more than 90 days after your service concludes and:

  • You have a valid defense to the lender’s claim
  • Your military service affected your ability to defend yourself

These protections only apply to judicial foreclosures. With nonjudicial foreclosures, they don’t apply because the lender proceeds according to state rules and doesn’t use the court system.

If you are a U.S. military servicemember at risk of losing your home in a foreclosure action and your lender attempts to deny your SCRA protections, the Law Offices of B. David Sisson can help. Attorney Sisson has assisted many military veterans who were struggling financially and facing foreclosure and will give your case the attention it deserves. To schedule a consultation, please contact us today.

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