Guidance Highlights Protections for Military Homeowners With Permanent Change of Station Orders
WASHINGTON, D.C. —The Consumer Financial Protection Bureau (CFPB) along with the prudential regulators – the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency and − issued joint guidance today to address mortgage servicer practices that may pose risks to homeowners who are serving in the military.
The guidance, which is intended to ensure compliance with applicable consumer laws and regulations, pertains to military homeowners who have received Permanent Change of Station (PCS) orders, which occur when a servicemember is ordered by the military to relocate to a new installation. Roughly one-third of active-duty servicemembers receive PCS orders each year.
“Those who serve our country deserve to be given the best service by their mortgage servicer,” said CFPB Director Richard Cordray. “Permanent Change of Station orders can complicate a servicemember’s homeownership decisions in ways that civilians may not experience. This guidance provides specific notice to mortgage servicers that this country already has substantial laws in place to help military members in this still-recovering housing market.”
PCS orders are non-negotiable and operate under short, strict timelines. Upon moving, a servicemember’s household income may drop if the servicemember is unable to find a renter willing to pay a price that will cover the mortgage payment or the spouse is not immediately able to secure a job in the new location. Additionally, a servicemember’s housing allowance may be lower at the new duty station. In order to avoid defaulting on their loan obligations, military homeowners need to receive clear, accurate, and timely information about available options such as loan modification or short sale, so they can make informed decisions and request the assistance for which they may qualify.
The interagency guidance addresses practices such as:
- Failing to provide servicemembers with PCS orders who notify their servicers of such orders with accurate, clear, and readily understandable information about available assistance options for which the homeowner may qualify based on the information known to the mortgage servicer;
- Asking servicemembers with PCS orders to waive their legal rights under the Servicemembers Civil Relief Act or any other law as a prerequisite to the mortgage servicer either providing information about available options or evaluating the servicemember’s eligibility for assistance;
- Advising homeowners with PCS orders who are current on their loans and able to make the monthly payment to intentionally skip making payments in order to create the appearance they are having financial difficulties in order to obtain assistance for which they would not otherwise qualify;
- Failing to provide a reasonable means for servicemembers to find out information about the status of their request for assistance;
- Failing to timely communicate the servicer’s decision regarding requests for assistance from homeowners with PCS orders and failing to include and explanation for the denial, where required.
If a regulator determines that a mortgage servicer has engaged in practices that are unfair, deceptive, or abusive, or if a regulator determines that a mortgage servicer has in any way violated federal consumer financial laws, it will take appropriate enforcement action.
The Federal Housing Finance Agency, and the Departments of Agriculture, Defense, Housing and Urban Development, Justice, Treasury, and Veterans Affairs have announced their support for the interagency guidance.
Any consumer, including servicemembers or veterans, who are having problems with their mortgages may call the CFPB toll free: 1-855-411-2372. Homeowners may also submit mortgage-related complaints on the CFPB website at ConsumerFinance.gov.