Obama announces new mortgage relief for servicemembers
WASHINGTON — Troops victimized by unfair mortgage practices could see hundreds of thousands of dollars in payments, and other homeowners could see mortgage refinancing costs cut in half, under plans outlined by President Barack Obama on Tuesday.
White House officials had already offered some details of the new programs, part of a $26 billion settlement announced last month between the government and the country’s major lenders.
But on Tuesday, in a news conference held as Republican voters in 10 states headed to the polls, Obama said the moves would help protect struggling homeowners and pay back troops whose service was not respected by mortgage companies.
“It is unconscionable that members of the armed forces and their families have been some of the most susceptible to losing their homes due to the actions of unscrupulous banks and mortgage lenders,” he said. “But over the last few years, that happened.”
Under the plan, federal officials will review thousands of military mortgages started since 2006 for any irregularities. Troops or families who were illegally foreclosed upon would receive at least $116,000, plus thousands more in punitive payments from the banks.
In addition, troops who were wrongly charged interest in excess of 6 percent on their mortgages — in violation of federal protections for servicemembers — will be eligible for payments four times what they overpaid.
That would mean about $9,000 for a military family with a $200,000 mortgage and an improper 7 percent interest rate. Obama said the move could provide thousands of dollars to families still struggling to make ends meet, and force corrections in their current housing payments.
The settlement also includes $10 million for the Veterans Housing Benefit Program Fund, which provides low-cost loans to eligible veterans, and an expansion of the Homeowners’ Assistance Program, developed by the Defense Department to help cover some of the loss when servicemembers are forced to sell their homes due to a military-mandated move.
Military homeowners will not have to apply to be eligible for the payouts or new programs. Federal officials have said they will review military and mortgage records to search for discrepancies in the numbers, and contact affected troops. However, troops who believe they may be eligible can call 800-896-7743 for more information.