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 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 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 the servicemember's 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).

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.

Getting Help

Many protections under the SCRA aren't automatic, which means a servicemember must request the protection. The manner in which you must invoke a protection, how long you get to invoke that protection, and what you must do to demonstrate that you qualify for a particular protection under the SCRA varies.

To get help invoking your rights under the SCRA, consider talking to a HUD-approved foreclosure counselor, military defense counsel (a military attorney independent from the standard chain of command specially designated to represent servicemembers confidentially), or a civilian attorney with extensive experience in military law.

Because financial difficulties can sometimes impact a military servicemember's security clearance or result in disciplinary or adverse administrative action, servicemembers should generally avoid initially contacting their base legal office. Military defense counsel or a civilian attorney can provide confidentiality that can be critically important to maintaining a servicemember's career.

Also, if you're facing foreclosure during or after active military duty, consider contacting your mortgage servicer (the company you make your payments to) immediately and ask about foreclosure avoidance options. Most lenders offer various options to borrowers who can't make their mortgage payments, like mortgage modifications, forbearance agreements, and repayment plans.