Editor’s Note: Since the time this blog article was published, the time period of protections after termination of active duty has changed over the years. See Section 533 of the SCRA, particularly, Footnote 9.
Rep. Stephen Fincher, R-Tennessee, recently introduced legislation that would extend the extended period for which servicemembers have access to mortgage protections under the Servicemembers Civil Relief Act.
Co-sponsored by Rep. Denny Heck, D-Washington, H.R. 5798 was introduced on Dec. 4, according to Targeted News Service. The bill, more commonly cited as the “Stability for Servicemembers Act,” simply extends a current amendment to the Servicemembers Civil Relief Act to stay in effect for one more year. It strikes language in Public Law 112–154; 126 Stat. 1208; 50 U.S.C. App. 533 that describes an expiration date at the end of this year and replaces it with an expiration date at the end of next year.
What protections are being extended?
The law being extended offers more protections relating to mortgages held by active duty servicemembers and recent veterans. It applies to all obligations on real or personal property owned by a servicemember that (1) were made before beginning of the servicemember’s military service and for which the servicemember is still obligated, and (2) are secured by a mortgage or “other security in the nature of a mortgage.”
Given the above, courts have the right to hold a hearing and on their own motion either (1) stay the proceedings for a period of time as justice and equity require, or (2) adjust the obligation to preserve the interests of all parties. Generally, this means that the courts will first try to give the servicemember more time to pay, then adjust his or her monthly obligations as needed.
Crucially, these protections apply not just during the servicemember’s period of active duty, but also for one year after this period. For this reason, businesses that regularly pursue consumers for a failure to meet the obligations outlined in mortgages, like banks and debt collectors, must not only verify military service, but also identify those consumers who were recently on active duty status.
There are also protections contained within this act that apply to distressed properties. When a servicemember is in breach of his or her obligations regarding a mortgage, meaning he or she is late or or isn’t making the monthly payments, these protections are triggered. While pursuing a lien on real property like a home is always a complex matter, there are further considerations still for active duty servicemembers and those who recently served.
Under the act, a sale, foreclosure or seizure of property for a breach of obligation is not considered valid if it takes place during or within one year after the servicemember’s period of military service. The only exceptions are (1) if a court order is granted to allow the sale, foreclosure or seizure to be made, or (2) if the servicemember waives his or her right to the protections under certain conditions.
As with many of the other provisions of the Servicemembers Civil Relief Act, this one has teeth. Noncompliance with the provision is considered a misdemeanor, and as such, anyone who knowingly violates it or attempts to do so will be fined as provisioned in title 18, U.S. Code, imprisoned for up to one year or both.
It seem very likely that H.R. 5798 will pass, extending these protections for another year. With this in mind and in consideration of the recent zeal with which prosecutors and legislators have pursued violators of the SCRA of every size, it is essential that businesses regularly verify military status to stay in compliance with this important law. The Servicemembers Civil Relief Act Centralized Verification Service can help to make this process simple and easy.