As a lender or property manager, you may be aware of the provisions of the Servicemembers Civil Relief Act, but COVID-19 has had an impact on some of these provisions, as it has had on most parts of the world’s everyday lives. Ensure that you understand the rules as they are today so that you can remain in compliance with the SCRA and out of the firing line of the Department of Justice and the Consumer Financial Protection Bureau.
Mortgages, COVID-19 & the SCRA
The CARES Act (Coronavirus Aid, Relief and Economic Security) provided for mortgage forbearances for up to a year for federally backed mortgages, including Veterans Administration loans. The end of that year is coming up for many of those who took advantage of the mortgage forbearance opportunity. The CFPB is warning that as mortgage payments become due again, the rules of the CARES Act must be followed.
These include not reporting payments not made during forbearance as delinquent and not requiring the entire amount to be paid in a lump sum at the end of the period.
While complying with the new CARES Act rules, lenders must also keep the SCRA in mind. The SCRA prohibits foreclosing on an active-duty servicemember (or their family) without first obtaining a court order. Some U.S. states require all foreclosures to go through the court system while others do not. However, the federal SCRA supersedes the laws in nonjudicial foreclosure states (listed below), requiring lenders to go through the courts to foreclose on active-duty servicemembers.
| Alabama | Michigan | Oregon |
| Alaska | Minnesota | Rhode Island |
| Arizona | Mississippi | South Dakota |
| Arkansas | Missouri | Tennessee |
| California | Montana | Texas |
| Colorado | Nebraska | Utah |
| District of Columbia | Nevada | Virginia |
| Georgia | New Hampshire | Washington |
| Idaho | New Mexico | West Virginia |
| Maryland | North Carolina | Wyoming |
| Massachusetts | Oklahoma |
Lease Termination
Property owners and managers must also follow the CARES Act — and the SCRA, when applicable. While SCRA protections always applied to active-duty servicemembers, National Guard members and reservists called to duty by the president (and in some states by the governor) for at least 30 days, these protections are now extended in cases of stop movement orders related to the COVID-19 pandemic. Thus, if a servicemember signed a lease to move to a new location and received orders to remain in place, they may terminate the new lease without penalty, according to the recent Congressional amendment.
The SCRA requires the servicemember to provide a copy of their orders for a permanent change of station, deployment of 90 days or more, separation, retirement or a stop movement; however, in practice, courts often side with the servicemember even in the absence of this notification, so it is always best to check your lessee’s military status before charging fees or filing a breach of contract complaint against them in court.
The Servicemembers Civil Relief Act Centralized Verification Service is your best source for military status verifications. We provide verification usually within 24 hours, and we offer batch discounts for clients that require routine monthly checks. Using our service versus tasking an employee with the job of determining military status saves you time and brings you peace of mind, as we have been the industry’s most respected and reliable source for many years. We even offer affidavits (for a small fee) that you can bring to court with you.
The question remains as to how anyone is able to verify if a particular foreign service employee is covered under this recent change. The DMDC may (or may not) include those employees when responding to inquiries. The U.S. State Department may have a way to respond to inquiries. The SCRACVS has written to both entities about the verification process and will update this article when more information is known. In the meantime, SCRACVS verifications do not include SCRA protections conferred upon foreign service personnel.
Be safe — use SCRACVS.