A few weeks ago major lenders including Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo were fined for violating the Servicemembers Civil Relief Act for illegal foreclosures. Today the White House announced additional information related specifically to assisting servicemembers who are upside down on their mortgage.
The first part of the new initiative includes:
Compensating Servicemembers Wrongfully Charged Higher Interest Rates: Servicers will conduct a review – also overseen by DOJ’s Civil Rights Division – of the files of their servicemember clients dating back to 2008 to determine whether they charged any an interest rate in excess of 6% on their mortgage after a valid request to lower the rate, in violation of the SCRA. Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to at least four times the amount wrongfully charged.
Previously I had written on lenders accepting PCS orders as a hardship of a short sale. The initiative spells this out even more clearly:
Providing Relief for Servicemembers Forced to Sell Their Home at a Loss Due to a Permanent Change in Station: Under the Department of Defense’s Homeowners’ Assistance Program (HAP), some servicemembers who are forced to sell their home at a loss due to a Permanent Change in Station (PCS) may be compensated for the loss in their home’s value. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP.
For those who are asking whether this means HAP itself has been extended the answer is no. Per an update to the HAP website:
“While the announcement outlines additional avenues for service members to pursue benefits, it does not expand the benefits provided under the Expanded Homeowners Assistance Program (HAP), established under the American Recovery and Reinvestment Act of 2009, or change the eligibility requirements of the HAP.”
If you are a Northern Virginia service member who did not qualify for DoD HAP benefits and wants to get their home sold give me a call. I’ve successful completed multiple HAP transactions, short sales and VA Compromise sales for servicemembers in the Northern Virginia area. If you are eligible for HAP it’s time to get your home on the market. HAP will not accept applications after September 30, 2012 whether you meet the eligibility requirements or not.
Here is the full report from the White House today on the Relief for Military Servicemembers and Veterans