Military Foreclosures. Assessment_ Response

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					Office of the Under Secretary of Defense
Personnel & Readiness




                   Military Foreclosures:
                  Assessment, Response
               Servicemembers Civil Relief Act
                                  COL Shawn Shumake
                                  Director of Legal Policy
                                       DUSD-PI/LP
                                     August 25, 2008
                                      703-697-3387
                                       david.shumake@osd.mil
    Office of the Under Secretary of Defense
    Personnel & Readiness


                                                     Overview

• Assessment of the Problem
        •       National
        •       Military
                  •      Media Distortions
                  •      DMDC Data
                  •      Anecdotal Service Reports
                  •      Relief Societies
                  •      Military OneSource
        •       Most Significant Impact
•   Services Available
•   Legal Protections
•   What DoD has Done
•   What the Services Can Do
•   Servicemembers Civil Relief Act – A Brief Look
  Office of the Under Secretary of Defense
  Personnel & Readiness



                                             Assessment General Public



• 1st Q 2008: 1/194 households – foreclosure filing
      •       112% increase from 1st Q 2007
      •       23% increase from previous quarter


• 2nd Q 2008: 1/171 household – foreclosure filing
      •       121% increase from 2nd Q 2007
      •       14% increase from previous quarter
    Office of the Under Secretary of Defense
    Personnel & Readiness



                                                    Assessment Military

•     Media Reports:

       • Distortions: “Foreclosures in Military Towns Surge at
         Four Times US Rate” (Bloomberg.com)

              • Based on w/in 10 miles of 10 “military cities”
              • Based only on 10 worst of 28 military “cities”
              • False Assumptions/Implications –
                     • What is a “military city”?


       • A Different Perspective (Christian Science Reporter):

              • “Economic Hardship Indicator” – Military towns scored
                favorably
Office of the Under Secretary of Defense
Personnel & Readiness

                                                  Assessment Military (cont’d)

 Active Duty Members Falling Behind in Rent or Mortgage Payments
                             Percent of All Active Duty Members, by Paygrade




                                                                    Margins of error range f rom ±1% to ±2%
 Office of the Under Secretary of Defense
 Personnel & Readiness



                                            Assessment Military (con’t)

• Service Reports – Legal Assistance Offices
    • Some increases noted, but not remarkable


• Relief Societies
    • No significant concerns raised


• Military OneSource Calls
    • Approx 3% of calls (Jan-May) “buying or selling a
      home”
 Office of the Under Secretary of Defense
 Personnel & Readiness



                                            Assessment Military (con’t)

• Most Significant Military Impact:
  • Rental Comparisons:
     • Military vs. General Public: 25% vs. 68%
     • Landlords face foreclosure

    • Impact of Frequent PCSs
 Office of the Under Secretary of Defense
 Personnel & Readiness


                                                    Services Available

• Military Legal Assistance Offices
           • http://legalassistance.law.af.mil/content/locator.php
• Military OneSource (1-800-342-9647)
    • 24/7 world-wide assistance, on-line, phone
    • Telephonic financial counselors, face-to-face on request

• Counseling Services
    • Department of Housing and Urban Development (1-
      800-569-4287)
           • Tips to avoid foreclosure: http://www.hud.gov/foreclosure/
           • Hope Now (1-888-995-4673)
                  • http://www.hopenow.com
 Office of the Under Secretary of Defense
 Personnel & Readiness


                                                       Legal Protections

• Renter’s Relief
    • Military tenant faces eviction when landlord
      foreclosed on
    • Local move at government expense authorized – 30
      Jul 08
    • Housing and Economic Recovery Act of 2008 (HERA)
• Lender Notification Requirements
           • 12 USC 1701x – SCRA fact sheet
• OneSource
           • Servicemembers Civil Relief Act -- Fact Sheet
                  • Http://www.militaryonesource.com/skins/MOS/home.aspx
Office of the Under Secretary of Defense
Personnel & Readiness
                                                    Legal Protections–
                 Servicemembers Civil Relief Act (50 USC app.)

   • SCRA Protections
          • Stay Provisions -- § 202
          • Cannot be evicted without a VALID court order
            (rent<$2831.13) -- § 531
          • Protections against foreclosure -- § 533
                 • Extended from 3 to 9 months (§ 2203, HERA)
          • 6% interest Cap (only applies to pre-service
            obligations) -- §527
                 • Bifurcation of 6% cap to apply for one year after AD for
                   foreclosures (§ 2203, HERA)
Office of the Under Secretary of Defense
Personnel & Readiness



                                                                 DoD Efforts

   • Gathered Anecdotal Service Assessments of Impact
   • Modified DMDC Questionnaires
   • Amended the JFTR to Reflect Authority for Local Moves

   • Informed
       • Coordinated w/ Service Chiefs of Legal Assistance/OTJAGs
       • Explored Foreclosure Classes at Army JAG School
       • Promoted Availability of Counselors
                 •   OneSource
                 •   E-mail to every Service member on Active Duty (15 Sep 08)
                 •   LES notification
                 •   MyPay notification

   • Examined possible HUD-certification of Military OneSource
     Counselors
Office of the Under Secretary of Defense
Personnel & Readiness



                                           DoD Efforts (con’t)

   • DoD Financial Roadshow

   • CMDR Dave Julian
Office of the Under Secretary of Defense
Personnel & Readiness



                                                             Service Efforts

 • What Can the Services Do?
        • Educate - Get the Word Out
               •   What resources are available to help?
               •   Overcome stigma that may delay asking for help
               •   Building ties between Community Services/JAG
               •   What programs/laws are available to help?
               •   Leveraging community assets
               •   Encourage “preventive law” initiatives

        • Implement Counseling Requirements
               • Section 2202, Housing and Economic Recovery Act
                   • Advise SM returning from active duty abroad how to avoid
                     foreclosures
Office of the Under Secretary of Defense
Personnel & Readiness



                                             Service Efforts (con’t)

   • What Can the Services Do?
          • Retain Higher BAH Rate of Former Permanent
            Duty Station

                 • JFTR U10402, para. B6

                 • “The secretary concerned may determine circumstances
                   [that] require dependents to reside separately and
                   authorize/approve [BAH] based on . . . the old PDS.”
Office of the Under Secretary of Defense
Personnel & Readiness


                                           Service Efforts (con’t)


• What Can the Services Do?
       • Re-look Homestead / tour extensions
         policy
       • Consider case-by-case tour extensions for
         housing-related difficulties
       • Temporarily house displaced families on
         the installation
       • Make Dining Facilities available to families
 Office of the Under Secretary of Defense
 Personnel & Readiness



                                            Concern, but not Crisis



• Continued Assessment

• Education – Emphasis

• Services engaged
     Office of the Under Secretary of Defense
     Personnel & Readiness


                                                PURPOSES OF THE SCRA

• to provide for, strengthen, and expedite the national
  defense through protection extended by this Act to
  servicemembers of the United States to enable such
  persons to devote their entire energy to the defense needs
  of the Nation; and

• to provide for the temporary suspension of judicial and
  administrative proceedings and transactions that may
  adversely affect the civil rights of servicemembers during
  their military service.
    Office of the Under Secretary of Defense
    Personnel & Readiness


                                               SUPREME COURT ON SSCRA


“Protect those who have been obliged to drop their own affairs to take up the burdens of
   the nation.”
                            Boone v. Lightner 319 U.S. 561, 575 (1943)

“The Act should be read with an eye friendly to those who dropped their affairs to answer
   their country’s call.”
                              Le Maistre v. Leffers 333 U.S. 1, 6 (1948)
   Office of the Under Secretary of Defense
   Personnel & Readiness


                                              STAY PROVISIONS— § 522


• Temporary delay in civil actions until servicemember can
  appear
   – During period of service plus 90 days, and
   – Servicemember has received notice of proceeding
• Automatic 90 day stay if:
   – SM shows military duty materially affects ability to
     appear, and date when can appear
   – Commanding officer writes letter stating duty prevents
     appearance and leave not authorized
    Office of the Under Secretary of Defense
    Personnel & Readiness
                                                   MAXIMUM RATE
                                               OF INTEREST—§ 527

• PRE-SERVICE loans incurred by SM, or SM and spouse jointly
   – But not guaranteed student loans
              (20 USC § 1078(d))
• Bifurcated Coverage –
   – During period of active service, but . . .
   – For mortgage type obligations, coverage extends 1 year beyond
     active service - § 2203 HERA
•   Cap of 6% per annum; all excess FORGIVEN
•   Recompute payments at 6% rate
•   Cap may be rescinded if creditor shows no material effect
•   SM must give written notice with copy of orders
  Office of the Under Secretary of Defense
  Personnel & Readiness


                                             EVICTIONS & DISTRESS— § 531


• Can ONLY evict upon court order: no self-help
   – Applies to SM or dependents
   – Residential rent does not exceed $2,400/mo (in 2003)
     (inflation adjusted to $2,831.13 in 2008)
   – Ability to pay materially affected by service
   – Court SHALL stay for minimum 90 days, or adjust the
     lease obligations
• Criminal sanctions for violation
• Dependents have right to invoke
   Office of the Under Secretary of Defense
   Personnel & Readiness
                                               INSTALLMENT CONTRACTS
                                         FOR PURCHASE OR LEASE— § 532

• In event of breach of contract, no termination or repossession of
  property without court order
• Applies to pre-service obligation
• Purchase, lease, or bailment of real or personal property
   – Payment or deposit made prior to service
• Misdemeanor offense for violation
• After hearing, a court may order repayment to SM to terminate
  contract, or
• SHALL stay the proceeding if SM’s ability to comply is materially
  affected and SM applies– length of stay determined by Court
• May stay on court’s own motion
  Office of the Under Secretary of Defense
  Personnel & Readiness
                                             MORTGAGE FORECLOSURE
                                                  PROTECTION— § 533

• Similar protection as for installment contracts
  and leases under § 532, but applies to
  obligations on real or personal property
  secured by a mortgage
• Applies to pre-service obligations
• Applicable: period of service + 90 days
• Court may stay proceedings or adjust
  obligation upon showing of material effect
  Office of the Under Secretary of Defense
  Personnel & Readiness

                                                  TERMINATION OF
                                             VEHICLE LEASES—§535

• Pre-service vehicle leases
   – If SM is called up or enters service for 180 days or
     more; or
• Vehicle lease executed after service commences if SM
  receives orders :
   – For permanent change of station outside
     continental US, or
   – For deployment for 180 days or more
• Notice of termination must be in writing, delivered to
  lessor (or lessor’s agent or grantee) along with copy
  of military orders (by hand, mail or FedEx)
• No need for “military clause”
 Office of the Under Secretary of Defense
 Personnel & Readiness
                                                 CERTIFICATES
                                             OF SERVICE—§ 582

• A Certificate of the Service Secretary shall be prima facie
  evidence as to all aspects of a person’s military service, or non-
  service.
• Such a certificate shall be furnished upon application (to each
  service) – SUGGESTION -- use DMDC website
• https://www.dmdc.osd.mil/scra/owa/scra.home
• A SM missing in action is presumed to continue in service until
  accounted for.
Office of the Under Secretary of Defense
Personnel & Readiness

                                                                  DMDC—
                                           Certificate of Military Service
Office of the Under Secretary of Defense
Personnel & Readiness
Office of the Under Secretary of Defense
Personnel & Readiness

				
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