In my role at the Consumer Financial Protection Bureau, I have talked to military families across the United States, including those at Joint Expeditionary Base Little Creek in Virginia Beach. The No. 1 topic they’ve raised with me is the decline in home values and the frightening prospect that – if their home is underwater – a Permanent Change of Station, or PCS, move will ruin their finances and put their security clearance at risk.
Military homeowners have been asking how they can deal with the PCS situation. Lacking any helpful answers, many of them have opted to avoid foreclosure by leaving their family in their home and going alone to their new duty station – a separation that can last three years or more.
There are a number of programs that can help military personnel with PCS orders, but unfortunately many service members are not hearing about them from their mortgage servicers at all, or quickly enough to do any good.
We have heard from service members that they have been told they had to be delinquent on their mortgage before they could qualify for help; asked to waive their rights under the Servicemembers Civil Relief Act in order to be evaluated for assistance; stalled with repeated demands for loan documents; routed to a different loan-servicing official with each call; denied the interest-rate reduction or foreclosure protection required by the SCRA; listed as “not responding to requests for information” while deployed, despite the fact that their spouse had a power of attorney and was providing information to the servicer; and given information about foreclosure alternatives too late to do any good.
I want military families to know that my office, the Office of Servicemember Affairs, has been working with other agencies on making loan-modification and foreclosure-relief programs more military friendly.
The Department of the Treasury has put new military provisions in some of its loan-modification and foreclosure-alternative programs, as have the government-sponsored enterprises Fannie Mae and Freddie Mac.
The federal government, 49 states and the District of Columbia also reached a settlement with the five largest mortgage servicers that provides enhanced foreclosure protection and short-sale possibilities for servicemembers.
And the Consumer Financial Protection Bureau and the prudential regulators are using their supervisory authority over mortgage servicers to send a strong message about the need to provide clear, timely and accurate information to servicemembers when they get PCS orders.
The new interagency guidance not only reminds servicers of the need to provide important information in a timely manner but also expresses serious concern over practices such as:
- Asking military borrowers to waive their legal rights under the Servicemembers Civil Relief Act or any other law as a condition of being evaluated for eligibility for assistance.
- Telling service members to skip payments in order to qualify for help.
- Failing to provide service members with accurate and readily understandable information about foreclosure alternatives.
- Failing to provide service members with PCS orders a way to check on the status of their request for assistance.
- Failing to respond to a service member’s request for assistance in a timely manner, or failing to give an explanation as to why a request was denied.
The CFPB and the regulators that signed this PCS guidance are making it clear that they will use their powers to ensure that military homeowners get the information they need from their mortgage servicers early enough to make an informed decision that will result in the least damage to their financial readiness.
If you are a PCS service member and are having problems with your loan servicer, we encourage you to file a complaint with the CFPB at www.ConsumerFinance.gov or (855)-411-2372.
You have served your country faithfully, and the Consumer Financial Protection Bureau is determined to see that mortgage servicers, in turn, serve you well.
Holly Petraeus is Assistant Director for the Office of Servicemember Affairs at the Consumer Financial Protection Bureau.