Are you an active duty servicemember with a property in Maryland? Are you behind on your mortgage payments or facing foreclosure? The good news is that there is a powerful federal law that can help provide military foreclosure assistance in Maryland.
The Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act, or SCRA, is eligible to all active duty members of the armed forces, This includes the commissioned corps of the Public Health Service, the activated National Guard, the commissioned corps of the National Oceanic and Atmospheric Administration (NOAA), and all branches of the military.
The purpose of SCRA is to assist military members in serving the United States without suffering financial or legal repercussions at home. The US government recognizes that that military pay for many activated reservists is likely lower than their normal income. This can make it hard to pay debts and nobody should be punished for serving our great nation.
Reduced Interest Rates on Existing Debts
High interest rates can be a heavy burden when trying to maintain or pay down debt. Thanks to the Servicemembers Civil Relief Act, active duty personnel debt, excluding federally guaranteed student loans, receives a 6% interest rate cap. If you have a mortgage with a high interest rate then this can save hundreds, if not thousands of dollars a month.
Interest Rate Reduction Requirements
To qualify for the reduced interest rate, you must meet these conditions:
- You took out the loan before you began active duty. For example, a reservist who purchases a truck in March and becomes active duty in July is entitled to the interest rate reduction. A soldier who takes out an automobile loan while on active duty and then transfers out of the country does not qualify for the reduction.
- Your military service hinders your ability to pay the loan at the pre-active service interest rate. You need to be able to show that you make less money now than before you went on active duty.
How to Apply for the Rate Reduction
To get the reduction you would start by sending a letter to your lender asking that the interest rate on the loan be reduced starting the date you began active duty. In this letter include copies of your orders, paychecks, and any evidence that shows you are now making less money than you did before becoming active duty.
How Will the Lender respond?
If you provided the correct information then the lender will be required to reduce the interest rate on the loan to 6% or less. If the lender does not believe that your reduction in income doesn’t affect your ability to pay then they may contest the reduction in court. The interest rate will remain reduced until the court makes a decision. This rate will only remain reduced while you remain active status.
Special Treatment for Tenants
If you have a lease on a property you may be able to terminate the lease obligations in order to avoid an eviction. This includes both residential and commercial leases. This is important if you were renting commercial space for a business that you own that now must sit vacant while you are deployed.
Residential and commercial tenants have the right to terminate their rental obligations if they enter active military service after signing a lease or rental agreement. To execute this termination you must mail written notice to the landlord or manager. This notice should include a copy of your orders.
Leases and month-to-month rental agreements are treated in the same fashion. Once your landlord or manager receives the notice, your tenancy will end 30 days following the next day that rent is due. If the notice was received on July 21 and the next rent due date is on August 1, then tenancy will end on September 1.
Foreclosure Assistance in Maryland
If the courts determine that being active duty has materially affected your ability to maintain mortgage payments then the SCRA will postpone the foreclosure proceeding for up to a year. In order to receive this protection the loan is required must have been issued before you became active duty.
Special foreclosure protections for those whose loans are owned by Freddie Mac
Freddie Mac offers further foreclosure relief to servicemembers beyond the protection that the Servicemembers Civil Relief Act provides. Freddie Mac will postpone the foreclosure proceeding during the entire period of military service and for an addition year after the date that military service ends.
To qualify you must meet these requirements:
- The property is your primary residence or the primary residence of one of your dependents.
- You or one of your dependents is the borrower.
- Or, the borrower was a servicemember who died during his or her period of military service and the mortgaged property is the primary residence of a dependent of that servicemember.
Facing foreclosure can be a confusing and frustrating process, especially if you are active duty overseas. We can help you navigate the process and obtain a solution that gives you peace of mind while you serve our nation.