12/21/12: New law expands protections for those in military service
By Benny L. Kass and Kenneth R. Harney,
Published: December 21, 2012
While they are overseas protecting our country, military personnel often have problems meeting certain financial obligations here at home, such as keeping current on their rent or mortgage obligations.
Last August, President Obama signed a law that strengthened existing provisions aimed at preventing military personnel from losing their homes.
For instance, the new law filled a loophole in the Service members Civil Relief Act (SCRA), President George W. Bush's 2003 update of a measure that passed during World War II. The 2003 SCRA law provided military personnel with mortgage relief, termination of leases, protection from eviction, a 6 percent cap on interest rates and the right to reopen any default judgments obtained while in the military.
However, that law applied only to obligations that originated before the servicemember's deployment. The new law, called "Honoring America's Veterans and Caring for Camp Lejune Families Act of 2012," amended SCRA by extending the period of time for some of the earlier protections.
The purpose of these laws is to allow servicemembers to devote their energies to their military tasks and not have to worry about their creditors.
Here is what servicemembers and National Guard members who have been called up for active duty for more than 30 days should know about the laws:
- If you are on active duty, all of your lenders should be immediately notified, and you must send them a copy of the military orders. Once the lender has been put on notice, it must reduce all interest payments down to 6 percent, and - most importantly - must forgive all pre-service debts which exceeded this 6 percent cap. It should be noted that this protection applies only to debts incurred before the borrower went into active military service; debts incurred while on active duty are not similarly protected.
- The reduction in the interest rate must be accompanied by a reduction of the monthly payment. The lender cannot require you to continue to make your same payment each month and credit more toward principal.
- If you are leasing a house or apartment and it was signed prior to your entry into the armed services, you have the right to terminate it, even before the term has expired. Members of the military who receive orders for a permanent change of station or to deploy with a military unit for a period of not less than 90 days also have the right to terminate leases, even if the leases were entered into while they were on active duty. The landlord must be given 30 days advance notice of the termination, and rent must be paid up to the date of termination. There is no longer a requirement that the lease contain a military termination clause.
- Like your civilian counterparts, you must continue to pay rent if the lease is not terminated. However, the law previously provided some protection from eviction. Only a court can order the eviction of the tenant. (This is the law in many states anyway. A landlord generally cannot exercise self-help by evicting a tenant without first obtaining court approval.) If the judge determines that the military service has materially affected your ability to pay, the court must stop the eviction. The new law now allows the judge to stay the proceedings or adjust the
obligation to preserve the interests of all parties at any time during the period of military service or within one year thereafter. Since this is a complex issue, tenants who are on active military service must consult with the attorney assigned to their unit.
The new law extends - and expands upon - the protections which Congress initially provided to the men and women who served during World War II.
The Supreme Court, in a case involving SCRA, has ruled that the law must be read with "an eye friendly to those who dropped their affairs to answer their country's call."
Benny L. Kass is a Washington lawyer. This column is not legal advice and should not be acted upon without obtaining legal counsel. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036.