By Brandon Moseley
Alabama Political Reporter
U.S. Senator Richard Shelby (R) from Alabama made comments about banking abuses involving servicemen at a Committee on Banking, Housing and Urban Affairs hearing on empowering and protecting service members and their families in the consumer financial marketplace, Tuesday.
Senator Shelby said, ““One problem is the disruption caused by overseas deployments and other relocations. When Permanent Change of Station orders, or ‘PCS’ orders, are issued, servicemembers are required to move even if they owe more on their mortgage than their home is worth. Under such circumstances, service members are faced with continuing to pay a mortgage for a house they no longer live in or defaulting on their loan. At our last hearing, we were told that this problem is compounded by the fact that a service member would not be able to qualify for a loan modification or a short sale if the service member was not yet delinquent.”
Sen. Shelby continued, “In response to this challenging problem, several agencies have recently taken action. The Federal Housing Finance Agency (FHFA) has announced that it will allow a servicemember who is given PCS orders and is current on a Fannie Mae or Freddie Mac mortgage to qualify for a short sale. The FHFA policy change will also allow Fannie and Freddie to waive any deficiency judgment against the military borrower.”
Alabama’s senior Senator said, “In conjunction with this announcement, our nation’s banking regulators also issued guidance on how mortgage servicers should treat military members who are struggling under the weight of a PCS-related move and mortgage debt. Today, I would like to hear from the Bureau of Consumer Financial Protection about how this guidance will help our nation’s servicemembers who face these difficult choices when they receive PCS orders.”
Sen. Shelby said that two of the nation’s largest bank had been guilty of violating the Servicemembers Civil Relief Act. The banks violated this law by foreclosing on members of the military while they were on active duty fighting for the country in Iraq and Afghanistan. Sen. Shelby said, “This is the sort of problem no military member should have to worry about while fighting overseas.”
Sen. Shelby said, “Presently, the Department of Justice is undertaking a review of several large mortgage servicers to determine if any other violations of this Act have occurred. Accordingly, I hope to learn whether additional violations have been uncovered as part of this review and whether the affected servicemember have received the remedies to which they are entitled.”…….“While often there appears to be very little upon which our respective sides can agree, there is complete agreement on our joint commitment to supporting our men and women in uniform.”
The 2003 Servicemembers Civil Relief Act (SCRA) Section 303 says clearly that “A sale, foreclosure, or seizure of property for a breach of an obligation described in subsection (a) shall not be valid if made during, or within 90 days after, the period of the servicemember’s military service except–(1) upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or (2) if made pursuant to an agreement as provided in section 107.” The penalty for a lender to violate the law includes both fines and imprisonment up to a year.
Senator Richard Shelby was first elected to the U.S. Senate in 1986 after serving in the U.S. House of Representatives.