A Quick Look at the Servicemembers Civil Relief Act
With Veteran’s Day fast approaching, it is important to highlight some of the protections afforded members of our armed forces and matters the firm has recently encountered in regards to the Servicemembers Civil Relief Act (SCRA).
The SCRA provides that real property owned by a servicemember cannot be foreclosed upon, sold, or seized during the period of active military service or up to twelve months thereafter without a court order or by written agreement of the servicemember waiving these protections. In order for the SCRA to apply, the obligation must be one for which the servicemember is still obligated, and the obligation must have originated before the period of active military service began.
Coverage under the SCRA extends to active members of the Army, Navy, Marine Corps, and Coast Guard and even their dependents, when applicable. It also includes members of these armed forces who are absent from active duty as a result of being wounded or being granted leave. For members of the National Guard there is a specific type of activation order that must be received for protections under the SCRA to apply. It appears based on current case law, however, that a two-week local National Guard training is not considered active duty for the purpose of coverage under the SCRA.
Should a court action arise from a servicemember asserting rights under the SCRA, the court will have the responsibility of determining whether or not the servicemember’s military service and status as active duty materially affected his ability to pay on the obligation. To make this finding, the court will analyze the servicemember’s pre-service and in-service incomes. Generally, the pre-service income is used as the standard for the court’s determination since this is what afforded the servicemember the ability to pay on-time originally and served as the basis for the agreed upon mortgage terms. When relief is appropriate for the servicemember, it is normally found by a stay of the proceedings, an extension of maturity dates, and/or diminished payments for the servicemember.
The SCRA was enacted so that members of the armed forces could serve our country and focus their attention on our Nation’s defense without adverse consequences to themselves, their families, or their finances. For lenders, violations of the SCRA can involve civil and criminal penalties including both fines and/or imprisonment. The Department of Justice has taken a firm stance on enforcing the protections the SCRA provides. Millions of dollars in penalties have already been assessed against lenders for SCRA violations in recent years. This is just one reason it is so important to employ a firm with the knowledge and experience necessary to guide you through the intricacies of the foreclosure process, such as Rubin Lublin, LLC. The firm is committed to compliance in all aspects of our business for you, our clients, and for those members of the armed forces serving our great country.