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Mortgage Assistance for our Military

After 9/11

For military families with dependants overseas, the stress of making ends meet while one spouse is away is difficult enough without the extra burden of payment shock brought on by adjustable-rate-mortgage resets. But there could be some relief for these households if they ask for it.

All military personnel on active duty are eligible for help with their mortgages and other debts under the 1940 Soldiers' and Sailors' Civil Relief Act. (The act was rewritten and strengthened by the Servicemembers Civil Relief Act of 2003.)

This law allows reserve and National Guard members and other military personnel whose mortgage obligations pre-date the start of their active duty to cap their rates at 6% while they are on active duty. Other benefits of the act include a prohibition on lenders foreclosing on the homes of affected military personnel during, and for three months after, their tours of active duty.

Since fixed-rate home-loan rates have hovered below 6% for several months, one of the most significant provisions of the act includes adjustable-rate mortgages and consumer debt.
It limits the amount of interest that may be collected on all debts -- not just mortgages -- to 6% per year during the period of military service. This provision applies to debts incurred before the commencement of active duty and includes interest on credit-card debt, car loans and other debts.
The Office of the Undersecretary of Defense for Personnel and Readiness emphasizes that the provision applies to pre-service debts, and the interest-rate reduction doesn't occur automatically -- service members must request it.

In addition to the mortgage-rate reduction and expanded foreclosure protection, federal officials have encouraged lenders to postpone principal payments for all servicemen and servicewomen during their activation and for three months thereafter.

Reservists who were called up to active duty after August 1990 and served 90 days continuously on active recall are eligible for Veterans Affairs' loans and other benefits. This provision was inserted to help the thousands of men and women who were pressed into service during Operation Enduring Freedom, beginning in 2001, and the subsequent Operation Iraqi Freedom.

Once a service member requests the rate reduction, the creditor either must comply or apply for court relief.

The relief act puts the burden on the creditor to show that military service has not "materially affected" a member's ability to repay the debt. The court generally grants relief if the creditor can make his or her case. The act also provides some assistance for renters.

Another key provision under the relief act protects dependents from being evicted while military members are serving. If a service member rents a house or an apartment that is occupied for dwelling purposes and the rent does not exceed $1,200 a month, the landlord must obtain a court order authorizing eviction. This provision applies regardless of whether quarters were rented before or after entry into military service.

In cases of eviction, courts may grant a stay of up to three months or enter any other "order as may be just," according to the act, if military service materially affects the service member's ability to pay the rent. This provision is not intended to allow military members to avoid paying rent but, rather, to protect families when they cannot pay the rent because deployment has affected their ability to do so.

Another significant protection under the act relates to civil proceedings. Service members involved in civil litigation may request a delay in the proceedings if they can show their military responsibilities preclude their proper representation in court. Service members who are on an extended deployment or stationed overseas most often invoke this provision.


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