November 11th, Veterans Day, is a day for our nation to thank all those who have worn the uniform of our country. They answered the call to serve, and we are very grateful that they did!
There are estimated to be over 20 million U.S. veterans living today, and we are proud to count a number of them among our ranks at the Consumer Financial Protection Bureau (CFPB). On my team at the Office of Servicemember Affairs (OSA) we have veterans of the Army, Marine Corps, Navy, and Air Force. We can truly say we have a joint perspective on military matters, and that the voice of the veteran is embedded in everything we do in OSA and heard throughout the CFPB!
Did you also know that November is National Military Family Month? We have a couple military spouses on our team, too, to make sure we don’t forget military families when we go about our work. With those military families in mind, here’s a piece of very good news — effective November 1, 2012 — for military homeowners with Permanent Change of Station (PCS) orders who have mortgages owned or guaranteed by Fannie Mae or Freddie Mac.
If you own a house that has lost value and you get PCS orders, you might choose to do a short sale, which is when you sell your house for less than what you owe to your lender. In the past, if you have a Fannie Mae or Freddie Mac loan, you couldn’t qualify for a short sale unless you were behind on your payments, something no military member wants to be for fear it might affect his or her security clearance. And if you did qualify for a short sale, you may still have to pay back the difference between what you owed and the amount the house actually sold for.
Fannie Mae and Freddie Mac have now changed the rules for military homeowners on PCS orders that require relocating more than 50 miles one way from the military homeowner’s primary residence. These homeowners will automatically be qualified to do short sales for these residences even if they are not behind on their payments. Also, as long as the residence was bought on or before June 30, 2012, the servicemember with PCS orders won’t have to make up the difference anymore! That’s a very big deal!
There’s already enough anxiety that comes with getting a permanent change of station order. Many military homeowners owe more on their homes than their homes are worth because of the drop in housing prices following the financial crisis. When you get orders to move, we don’t think you should be stuck with a house thousands of miles away that you’re hoping will increase in value so you can sell. That’s why the recent change is so important for these military homeowners.
To see if you have a Fannie Mae loan, go to Fannie Mae’s Know Your Options website or check out their specific information about military options. To see if you have a Freddie Mac loan, see Freddie Mac’s information about how to get help with your mortgage. Freddie Mac also has more information about doing a short sale.
If you have a Fannie or Freddie loan and you get the runaround or incorrect/out-of-date information from your loan servicer concerning these new military PCS provisions, you can file a complaint with CFPB at http://www.consumerfinance.gov/complaint. We are here to help!