(1/5/2012) Erate Exclusive - Military families struggling to pay "under water" mortgages suffer a unique and more complicated set of circumstances civilians don't experience.
A mortgage is considered "under water" when its balance is larger then the home is worth and military families experience the condition and its effects in disproportionate numbers for a variety of reasons.
In a Stars and Stripes report, "Holly Petraeus: 'Under water' home loans force families apart," the U.S. military publication explains why.
• Many military bases are in states hardest hit by the housing crash - California, Nevada, and Florida. In some military towns two of three home owners have under water mortgages.
• Due to reassignments, military families move every two to four years. That typically means selling one home and moving to another, but today's market makes selling difficult if not impossible in general. With an under water mortgage, selling can be out of the question unless the family can afford a heavy financial loss.
The dilemma has forced many military families to split up when the service member is reassigned, leaving the larger family behind to hold down the fort with no guarantee the service member will ever be reassigned to the same area.
• Military members who don't pay their mortgage not only suffer credit dings, they also can put their security clearance at risk.
The Soldiers' and Sailors' Civil Relief Act of 1940 provides some relief for all military personnel including special assistance for military reserve members called to active duty, including:
• Reduced interest rate on mortgage payments.
• Reduced interest rate on credit card debt.
• Protection from eviction if your rent is $1,200 or less.
• Delay of all civil court actions, such as bankruptcy, foreclosure or divorce proceedings.
The CFPB's service member affairs office offers education services, it monitors military consumer complaints and coordinates all federal and state consumer protection efforts on behalf of military personnel and their families, for both those on active duty and veterans.
Stars and Stripes' Petraeus report also said there are other efforts to assist military personnel and their families, including:
• Fannie Mae and Freddie Mac changing their guidance to servicers. A military move is a qualifying hardship to allow military families to tap Fannie and Freddie assistance programs.
• Recent changes have allowed more military service members to qualify for short sales and deeds-in-lieu of foreclosure under the Home Affordable Foreclosure Alternatives (HAFA) program. Service members no longer need to show a drop in income to qualify.
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