WASHINGTON – Sen. Richard Shelby recently brought some congressional attention to the financial problems faced by troops and their families.
Rapid relocations of deployed service members – otherwise known as Permanent Change of Station orders – top the list of concerns for military service members obligated to pay off housing loans despite sudden transfers.
“Under such circumstances, service members are faced with continuing to pay a mortgage for a house that they no longer live in or default on their loans,” said Shelby last week.
Shelby, R-Tuscaloosa, is the top Republican on the Senate Banking, Housing and Urban Affairs committee, which held a hearing last week on the protection of troops as consumers in the marketplace.
Military homeowners previously did not qualify for short sales on their homes, resulting in either paying two mortgages or foreclosure. A short sale occurs when a homeowner sells his property for less than the balance of his mortgage, and the bank agrees to take the “short” amount.
In June, the Federal Housing Finance Agency announced changes to short-sale policies for Fannie Mae and Freddie Mac loan agencies to allow members of the military to short sell their homes regardless of being up-to-date on mortgage payments.
In a statement, the FHFA said Fannie Mae and Freddie Mac will not pursue a deficiency judgment or any cash contribution on property purchased on or before June 30.
Delaware Attorney General Beau Biden said he and attorneys general in 48 other states worked with the Department of Justice and Department of Housing and Urban Affairs to reach a $25 billion settlement with the nation’s five largest mortgage servicing banks, including Bank of America and Wells Fargo.
The settlement addressed some of the most significant mortgage-related issues of military families, including allowing banks to consider PCS orders when making decisions on short sales, deeds, and loan modifications.
“Military families have been hit especially hard by the housing crisis,” said Biden. “They are often backed into financial corners by the realities of military life.”