Questions & Answers for Reservists, Guardsmen and Other Military Personnel

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regarding The Soldiers' and Sailors' Civil Relief Act of 1940

Who Is Eligible?

The provisions of the Act apply only to active duty military personnel - members of the Army, Navy, Marine Corps, Air Force, Coast Guard; Public Health Officers detailed to the Army or Navy on active duty; and military reservists and guardsmen called to active duty - who had a mortgage obligation prior to enlistment or induction for an initial tour of duty or prior to recall after a break in service when subsequently ordered to active duty.

Am I Protected against Foreclosure?

The Act also provides specific protection against foreclosure when a person is called into active military service as long as the contract obligation is entered into prior to entry into active duty.

FHA mortgage loans have additional protections, including the possible postponement of monthly principal payments on the mortgage note for the period of military service, as long as the contract obligation is entered into prior to entry into active duty.

Who Do I Call to Take Advantage of This Benefit?

Active duty personnel and reservists should contact their lenders and other creditors and inform them that they have been called to active duty.

What Information Do I Need to Provide to My Lender?

When you or your representative contact your mortgage lender, you should provide the following information:

• a copy of the orders from the military notifying you of your activation;
• your FHA case number; and
• evidence that the debt precedes your activation date.

FHA lenders have been reminded by HUD of their obligation to follow the Act. If notified that a borrower is on active military duty, your lender must advise the borrower or representative of the adjusted amount due, provide adjusted coupons or billings, and ensure that the reduced payments are not returned as insufficient payments.

Will My Payments Change Later? Will I Need to Pay Back the Interest Rate "subsidy" at a Later Date?

The change in interest rates is not a subsidy. The temporarily reduced interest rate will result in a reduction to the payment amount due during the period of active duty. Once the period of active military service ends, the interest rate will revert back to the original interest rate, and the payment will be recalculated accordingly.

The mortgage payment may increase, if your lender allowed you to postpone payments on the mortgage principal amount, as the amount of the outstanding principal due will need to be amortized into the mortgage over the remaining life of the loan.

How Long Does the Benefit Last? Does the Period Begin and End with My Tour of Duty?

Interest rate reductions are only for the period of active military service. Other benefits, such as postponement of monthly principal payments on the loan and restrictions on foreclosure may begin immediately upon assignment to active military service and end on the third month following the term of active duty assignment.

Does This Benefit Apply to Non-FHA/VA Loans as Well?

Yes. The Act is law that governs the debts of military personnel, regardless of the type of mortgage loan. This act also requires creditors to charge no more than six percent interest rate for the period of active military service on all debts incurred by a member of the military service prior to entry into active duty service, unless in the opinion of the court, the ability to pay is not materially affected by reason of such service.

However, the postponement of principal payments is not mandated by the Act. This is an option available to the lenders on FHA-insured loans.

How Can I Learn More about Relief Available to Active Duty Military Personnel?

An article describing the Soldiers' and Sailors' Civil Relief Act is posted at http://www.defenselink.mil/specials/Relief_Act_Revision/