Reservists, National Guard members
eligible for lower mortgage rates
By Lisa Burgess,
Washington bureau
WASHINGTON — Reservists and members of the National Guard
recently called to active duty may be eligible for low home-loan interest rates, U.S.
Housing and Urban Development Secretary Mel Martinez said Monday.
Martinez has sent all mortgage companies a letter reminding them of
their obligations under the Soldiers and Sailors Civil Relief Act of 1940.
The SSCRA requires all banks and home mortgage lenders to charge no
more than 6 percent interest on loans held by military personnel who are subsequently
called to active duty.
The statute, which was passed during World War I, re-enacted during
World War II and last modified during Operation Desert Storm in 1991, protects
servicemembers by providing reduced interest rates on mortgage payments; credit card debt
and other individual loans or obligations incurred before their entry into active duty.
The law forbids lenders to begin foreclosure actions against any
personnel on active duty, or for three months thereafter, without a court approval or an
agreement between the parties.
The act also protects reservists from eviction if their rent is less
than $1,200, as well as entitling them to a delay in all civil court actions such as
bankruptcy, foreclosure and divorce proceedings.
The act’s provisions cover any member of the armed services on
active duty, including guard and reserve component personnel called to active duty for
deployments such as Kosovo and Bosnia.
In order to qualify for reduced interest rates, servicemembers have
to show that their military income is less than their preservice income, and that the
reduced salary will affect their ability to meet financial obligations. If that is the
case, the servicemember’s creditors must reduce interest rates on credit cards and
mortgages to 6 percent for the duration of the deployment.
Student loans are not covered by the act.
Martinez is also encouraging mortgage lenders to postpone principal
payments for all servicemembers during their activation and for three months after they
return home; he cannot make that policy mandatory, however.
Martinez said that servicemembers should contact their mortgage
lenders to discuss their payments while deployed. He also said he did not anticipate that
financial institutions would attempt to stonewall reservists invoking the act. The lenders
“have been very cooperative in other issues we’ve dealt with,” Martinez
said.
HUD has set up a toll-free (from the United States) hot line for
servicemembers with questions about their rights under the SSCRA: (888) 297-8685, between
the hours of 7 a.m. and 7 p.m. Eastern Daylight Time, Monday through Friday.
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