We research, you save.

Deployed overseas, foreclosed on back home

By   |  Posted in Government Programs

As the real estate downturn grinds on, some military families are fighting a two-front war.

Service members are risking their lives in two wars overseas, while their loved ones back home are battling to save the house from foreclosure.

The Servicemember's Civil Relief Act, in theory, bars mortgage lenders from foreclosing on active-duty military personnel (while overseas) who have fallen behind on their monthly payments.

But in the age of robo-signing and mass foreclosures, there have been hundreds, if not thousands, of cases of military families who have either faced foreclosure or have lost their homes, despite having a service member posted in Iraq or Afghanistan, says Bill Nelson, executive director of USA Cares.

View customized VA mortgage rates

A nonprofit founded after 9/11 to support active-duty military personnel and their families, USA Cares now spends tens of thousands of dollars a month, or roughly half of its assistance dollars, helping military families hang onto their homes.

"These robo-foreclosures happen so fast they just don't know what is happening to them," Nelson says.

While the first wave of foreclosures was partially fueled by service members who fell behind after taking out exotic subprime mortgages, the crisis now has shifted, and spouses of military personnel back home are struggling to make ends meet in an economy that's in the tank, explains Nelson.

Things can get worse once they return home

Even if the families are able to avoid falling into mortgage trouble, service members can still face financial difficulties after they return home, says Kip Lee, a branch manager for Housing and Credit Counseling Inc., based near Fort Riley in Manhattan, Kan.

Once off active duty, a service member's pay can drop anywhere from $500 to $1,000 a month.

Faced with problems making their monthly payments, some families hunker down and ignore the foreclosure notices sent from their mortgage servicers.

"Our military people are finding the same bewildering process," Nelson says. "You have to know who to call. The mortgage servicers are not eager to talk to you."

Given the dangers, a good offense may be the best defense for service members and their families, Nelson contends.

Make the call for a good offense

The problems are often compounded when families choose to pay other bills first--such as utilities or credit card charges since they are lower, while letting their biggest payment, the mortgage, slide, says Lee.

"The biggest mistake you can make is not paying," Lee says. "They will take your house."

Instead, military families need to seek help before they start falling behind on their monthly payments, not after.

"If you are faced with making a decision on what to pay, that is when you need credit counseling," Lee says.

Other tips for keeping mortgage lenders at bay include:

  • Make sure the mortgage company knows your home is protected from foreclosure. If a service member is preparing to go overseas, another big mistake is assuming the Servicemember's Civil Relief Act will automatically protect their home from foreclosure while they are away. The service member needs to take the lead on this and call the mortgage lender to make sure someone there gets a copy of his or her deployment orders, according to Nelson. "Nine times out of 10, they will not know."
  • Seek help from the military's legal experts. For a military family who has already been hit with a foreclosure notice, a good place to start seeking help is at the local base's legal department, or Judge Advocate General's Corps (JAG). These legal specialists should be well-versed in the foreclosure protections families of active-duty service members have.
  • Reach out to a military nonprofit. For military families who have fallen behind on their monthly payments and need to dig themselves out of a financial hole, there is help as well. USA Cares can provide up to $7,500 in assistance.

Unfortunately, many of our service members are fighting a war abroad and one at home. Protect your home and your family when you're away by ensuring they have a roof over their heads. Communicating with your lender and understanding your options are the best battle plan you can have.

More help from HSH.com

  • How to avoid a VA foreclosure

  • Weekly Mortgage Rates Radar 02/03/2016: Rate Declines Continue

    HSH.com releases its latest Weekly Mortgage Rates Radar showing another decline in mortgage rates during the seven-day period ending February 2, as financial markets continue to react to soft data and the Federal Reserve's apparently more cautious position with regard to raising interest rates. The Weekly Mortgage Rates Radar reports the average rates and points offered by lenders for the two most popular types of mortgages, the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM).
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve decided today to increase the federal funds rate by one-quarter of a percentage point (0.25 percent).
  • Mortgage Rates Radar 1/26/16: Mortgage Rates Still Falling

    HSH.com releases its latest Weekly Mortgage Rates Radar showing that the month-long decline in mortgage rates continues during the seven-day period ending January 26, as the Federal Reserve again meets to discuss monetary policy and the state of the economy. The Weekly Mortgage Rates Radar reports the average rates and points offered by lenders for the two most popular types of mortgages, the conforming 30-year fixed-rate mortgage and the conforming 5/1 adjustable-rate mortgage (ARM).
  • HSH's Innovative Thinkers in Housing Economics 2016

    HSH.com's annual list of standout Innovators and Thinkers in real estate and housing economics.