Congress Extends Foreclosure Postponements for Military Servicemembers
On January 12, JD Supra Business Advisor posted an article by CEB (Continuing Education of the Bar-California) discussing the recent decission by Congress to extend special provisions in the Servicemembers Civil Relief Act (SCRA) (50 USC App §§501–597a).
Congress Extends Foreclosure Postponements for Military Servicemembers
At the 11th hour (late December, 2014), Congress extended special provisions in the Servicemembers Civil Relief Act (SCRA) (50 USC App §§501–597a) that mandate postponement of a foreclosure on a military servicemember’s property. See Pub L 113–286.
What is the SCRA? The SCRA invalidates a foreclosure of a lien by virtue of a mortgage or deed of trust on real property for nonpayment of any amount due if the foreclosure is conducted while the debtor is in military service, or within 1 year after the debtor’s military service has ended, except on court order or if made valid under a written agreement. 50 USC App §533. This postponement applies only if the obligation was incurred before the debtor entered military service. 50 USC App §533(a)(1). California has enacted similar provisions. See Mil & V C §408.
On judicial foreclosure actions, the SCRA allows a servicemember to request a stay of the action “for a period of time as justice and equity require,” if the action was filed while the member was engaged in military service, or within 1 year after the service has ended, and the member’s ability to comply with the mortgage payments “is materially affected by military service.” See 50 USC App §533(b)(1). The court also has the power to modify the loan under 50 USC App §533(b)(2). Here, too, California has enacted similar provisions. See Mil & V C §408.
Who is Affected by the SCRA? The SCRA applies to all military servicemembers and their dependents, whether they entered military service before or after signing a loan or mortgage agreement. When the SCRA applies, it effectively precludes foreclosure by trustee sale without court intervention. Consequently, before conducting the foreclosure sale, trustees customarily require assurance that the trustor is not a member of the armed forces. The beneficiary usually provides this assurance by executing an affidavit on a form supplied by the trustee. If the beneficiary has no direct knowledge of the trustor’s military status, it may be necessary to obtain certificates from the personnel branches of each of the armed forces stating that the trustor is not in the military service.
What Does the 2014 Amendment Do? The 2008 amendment to the SCRA (50 USC App §533) had changed the time period during which foreclosure could not occur from 90 days to 9 months; the 2012 amendment had changed that time from 9 months to 1 year and was scheduled to expire on December 31, 2014. The 2014 amendment (1) extended that sunset date to December 31, 2015, and (2) effective January 1, 2016, the period under §533 will revert from 1 year to 9 months, rather than to the pre-2008 period of 90 days.
Further Research. There are great resources at CEB for foreclosure litigation attorneys. For discussion of both nonjudicial and judicial foreclosure, see California Mortgages, Deeds of Trust, and Foreclosure Litigation, chaps 2–3, 7 (4th ed Cal CEB). A new annual update of the book will be published in January 2015. Go to ceb.com to see the table of contents for each chapter of the book.
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About Safeguard
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow. Website: www.safeguardproperties.com.
