The $25 billion National Mortgage Settlement for civilians, includes additionally funded provisions for military veterans and service members who were victims of foreclosure abuses or who were wronged in the mortgage process.
"It is unconscionable that members of our armed forces and their families are among those who were most susceptible to losing their homes due to the unscrupulous acts of banks and mortgage lenders," President Obama said during a White House news briefing March 6.
Due to the nature of military life, military families struggling through the housing crisis suffer a unique and more complicated set of circumstances than civilians, according to the military's "Stars and Stripes" report, 'Under water' home loans force families apart," by Holly Petraeus, head of Servicemember Affairs in the Consumer Financial Protection Bureau (CFPB).
The welcomed announcement about relief for military households came during the same briefing Obama recently used to announce a cost-cutting move to open the door to cheaper Federal Housing Administration mortgages for as many as 3 million borrowers.
The announcement effectively bolsters provisions in the existing Servicemembers Civil Relief Act (SCRA).
"Through this historic settlement, VA has ensured that veterans, servicemembers, and National Guard and Reserve members will continue to receive every possible opportunity to retain their homes," said VA Secretary Eric K. Shinseki.
Both announcements followed finalization of the National Mortgage Settlement, the largest ever federal-state civil settlement, designed to offer nationwide relief to civilians and military personnel alike for faulty foreclosure practices mortgage servicers instituted shortly after the housing market crashed.
Bank of America, JP Morgan Chase, Citigroup, Ally Financial and Wells Fargo, some of them rescued with taxpayer money, signed onto the agreement, which comes with provisions for military personnel who suffered foreclosure or mortgage abuse dating back to the dawn of the housing crash.
Military personnel provisions include:
Compensation for wrongful foreclosures. With oversight by the Department of Justice's (DOJ) Civil Rights Division, mortgage servicers are mandated to review the files of every servicemember foreclosed upon since 2006 to look for foreclosure violations under the SCRA.
For violations, mortgage servicers will compensate each service member a payment equal to the greater of:
Compensation for interest rate over charges. Also with DOJ oversight, mortgage servicers must review files dating back to 2008 to determine if they charged any servicemember an interest rate in excess of 6 percent on their mortgage after a valid request to lower the rate, in violation of the SCRA. Servicers must provide any wronged servicemember a payment equal to at least four times the amount wrongfully charged.
For example, if a servicemember took out a $200,000 mortgage with a 7 percent interest rate was wrongfully denied a request to chose from mortgage refinance rates to lower their interest rate to 6 percent over a course of 18 months, they would receive a payment of over $9,000, plus interest.
Of course, that's just an example, based on old mortgage rates. With today's mortgage refinance rates, rates are substantially lower.
Qualified servicemembers have long been eligible for reduced, U.S. Department of Veterans Affairs (VA) "VA streamline rates," through an Interest Rate Reduction Refinancing Loan (IRRRL) program that streamlines the application process by not requiring a minimum credit score or appraisal, provided the borrower is current on mortgage payments.
Relief for servicemembers forced to sell at a loss due to a Permanent Change in Station (PCS). Under the Department of Defense's (DOD) Homeowners' Assistance Program (HAP), some servicemembers forced to sell their home at a loss due to a Permanent Change in Station (PCS) may be compensated for the loss in their home's value.
Under the settlement, mortgage servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owed on their mortgage due to a PCS, but who are not eligible for HAP. The provision extends benefits to servicemembers who bought their homes between July 1, 2006 and December 31, 2008, or who received a PCS after October 1, 2010.
Veterans Housing Benefit Program. Mortgage servicers will pay $10 million into the Veterans Housing Benefit Program Fund, through which the Department of Veterans Affairs guarantees loans provided on favorable terms to eligible veterans.
Foreclosure protections for servicemembers receiving Hostile Fire/Imminent Danger Pay. The SCRA prohibits foreclosures against active duty servicemembers without first securing a court order, but only if their loan was obtained when they were not on active duty.
The settlement extends this protection to all servicemembers - regardless of when their mortgage was secured - if within nine months of the foreclosure they received Hostile Fire/Imminent Danger Pay and were stationed away from their home.
To get help with the National Mortgage Settlement's provisions for members of the military, veterans and servicemembers – even those without a VA guaranteed loan - should call a national toll-free number, 1-877-827-3702.
In a statement applauding the announcement, DOD Secretary Leon E. Panetta said, "These new steps are the result of an extensive interagency effort made by this administration to protect and support service members and veterans, and this initiative will help military families overcome obstacles to purchasing and maintaining a home."
Copyright© 2013 Realty Times®. All Rights Reserved
Copyright ©2013Realty Times®. All Rights Reserved