Foreclosure and Military Members

Foreclosure and Military Members


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One of the primary benefits of the Soldiers’ and Sailors’ Civil of 1940 and the Servicemembers Civil Relief Act of 2003 (collectively the “SCRA”) is the protection of active military personnel and their families (and anyone who co-signed a loan with them) from foreclosure. Although the SCRA will not relieve you of your obligation to repay your loan, it will allow for temporary suspension of collection actions (including foreclosure) while you are on active duty.

The SCRA has far-reaching effects and may be used to:

  • stop a foreclosure. If you are on active duty you may get immediate relief from a pending foreclosure.
  • invalidate a foreclosure sale. If your property was sold while you were on active duty you may be able get your property back.
  • reduce your loan interest rate. While you’re on active military duty you may be entitled to a lower than market interest rate on your property loan—even if you’re not in foreclosure. This may significantly reduce your monthly payments.

Are You Covered by the SCRA?

To use the SCRA as a “shield” to stop the foreclosure, you must be able to show a court that all of the following apply:

  • You are on “active duty”, or you are the dependent or co-signer of a servicemember on active military duty.
  • The debt is secured by a mortgage or deed of trust against your property.
  • You incurred the debt prior to your active duty in the military.
  • You, or your dependents, still own the property.
  • Your lender has started foreclosure proceedings.
  • Your ability to meet your financial obligations has been “materially affected” by your military service

Courts have broad discretion in interpreting and applying the SCRA to foreclosure situations. Courts are sympathetic with a servicemember unable to keep current on his or her loan payments. Courts are almost always compassionate to servicemembers (and their co-signers and dependents) attempting to stop foreclosures of their property.

Are You on Active Duty?

If you are on active duty in the armed forces, you are entitled to special protection under the SCRA. Section 532 of the SCRA helps active military personnel by temporarily suspending all foreclosure proceedings.

Are You a Servicemember Covered by the SCRA?

The SCRA protects members of the U.S. armed forces (army, navy, air force, marine corps, and coast guard), including reservists, who are on active duty. The U.S. armed forces defines “active duty” as full-time presence on a military base due to military assignment or full-time training prior to induction. The SCRA also protects officers of the Public Health Service who are detailed for duty with any branch of the military.

Are You a Co-Signer for or a Dependent of a Servicemember on Active Duty?

Frequently, a spouse, friend or family member may have signed loan documents along with a service member. When a lender discovers that they cannot legally pursue the servicemember (because of his or her active duty status in the military), they may attempt to collect from a co-signer on the loan. In these circumstances, the SCRA extends to everyone who co-signed with an active servicemember.

The SCRA also covers a service member’s dependents who didn’t sign the loan, such as children or a spouse. In other words, a lender can’t proceed against a service member’s dependents while he or she is on active duty.

Was the Debt Incurred before Active Duty Began?

The SCRA applies only to debts incurred before you began active duty in the military. The SCRA does not, however, apply to loans entered into after beginning active military duty. If you borrowed money to purchase property while you were already on active military duty (or after you’d left the military), the SCRA will not stop your foreclosure.

Service Member’s Inability to Meet Financial Obligations

If a servicemember defaults on a loan obligation because he or she can no longer afford the payments due to being on active duty, that servicemember can contend that the military’s lower wages has “materially affected” his or her financial ability to pay debts as previously agreed. This issue arises because service members typically receive substantially less income in the military than they received in private life, or they are in combat and unavailable to make loan payments.

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