Foreclosure Protections & the Military: When a Servicemember Gets a Mortgage After Going on Active Duty

The Servicemembers Civil Relief Act (SCRA) provides legal relief to military personnel who are in danger of foreclosure.

The Servicemembers Civil Relief Act (SCRA) provides legal relief to military personnel in danger of foreclosure. Not only are servicemembers entitled to certain protections from foreclosure for loans taken out before going on active duty, but the SCRA also can protect those who took out their loans after going on active duty, like by prohibiting default judgments except under specific circumstances and providing an opportunity to get a 90-day delay of foreclosure.

SCRA Protection Against Default Judgments

The SCRA protects servicemembers against default judgments. (50 U.S.C. § 3931). This protection applies to judicial foreclosures.

How Judicial Foreclosures Work

Judicial foreclosures are completed through the state court system. The lender initiates the process by filing a complaint and having it served on the borrower and other defendants, along with a summons to appear in court. A "default judgment" occurs if you fail to respond to the suit, and the judge then rules against you in your absence.

But the SCRA protects servicemembers against default judgments. So, even if you took out your mortgage after going on active duty, a court can't enter a default judgment against you while you're on active duty unless it follows a specific procedure (described below).

Special Judicial Foreclosure Procedures for Servicemembers

A lender can complete a judicial foreclosure against an absent servicemember, but only under specific circumstances.

Under the SCRA, a plaintiff (the party that brings a lawsuit) who seeks a judgment must inform the court if the servicemember is on active duty. If neither the servicemember—nor an attorney on his or her behalf—appears in the action, the court can't enter a judgment until after the court appoints an attorney to represent the servicemember. But if an attorney appointed to represent a servicemember can't locate the servicemember, the attorney's actions in the case won't waive any defense the servicemember has or otherwise bind the servicemember. (50 U.S.C. § 3931).

90-Day Delay

Once a court appoints an attorney to represent the servicemember, that attorney will often seek a stay of proceedings (a delay). If requested by the attorney (or upon the court's own motion), a court will grant a stay of proceedings for a minimum of 90 days if:

  • there might be a defense and the defense can't be presented without the servicemember's presence, or
  • after due diligence, the servicemember's attorney hasn't been able to contact the servicemember or otherwise determine if a meritorious defense exists. (50 U.S.C. § 3931).
Also, the SCRA allows servicemembers themselves to stay a judicial foreclosure procedure for a period of not less than 90 days, so long as they meet certain criteria and request it from the court in writing. (50 U.S.C. § 3932).

What If a Court Enters a Default Judgment Against You?

If the court enters a default judgment against you during your period of military service—or within 60 days after termination of or release from such military service—you might be able to reopen the case later. You must demonstrate that:

  • your military service substantially affected your ability to defend yourself in the case, and
  • you have a defense to the action.

A request to reopen a judgment must be filed no later than 90 days after the date of the termination of or release from military service. (50 U.S.C. § 3931).

Mortgage Assistance for Military Servicemembers

If you find yourself facing foreclosure at any time during or after active military duty, contact your loan servicer immediately and ask about loss mitigation options. Most lenders have loss mitigation programs to assist borrowers, including servicemembers, who can't make their mortgage payments.

You might be able to qualify for a loan modification, repayment agreement, forbearance agreement, short sale, or deed in lieu of foreclosure.

More State Protections

In addition to federal law, many states have statutes that provide additional protections for servicemembers. To learn more about relevant state laws, check out Appendix A (State Information) in Nolo's The Foreclosure Survival Guide or talk to an attorney.

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