Is the Servicemembers Civil Relief Act Notice to be provided only for past due loans secured by the servicemember's primary residence or for any type of real property-secured loan? I've been digging all morning and can't seem to nail down the answer.

Per HUD Mortgage Letter 2006-28

"... All mortgage loans, includeing conventional mortgages and mortgages insured by HUD are subject to the notification requirement ..."
And I am sure you know the requirement is within 45 days of the missed payment date.

Thanx, ktac MITCH, but how is "mortgage loan" defined in the statute? Does it mean any loan secured by residential real estate...or a loan secured by a prmary residence? That is what I'm seeking an answer to. I think that currently, we're only providing this notice in connection with past due loans secured by a primary dwelling. In other words, we're mirroring same loans for which a HUD counseling notice is required to be provided.

Shirley,
The 2006 law ammended the content of the "HUD Homeownership counseling notice".
So, yes it is only for Primary Residence.

Sorry......I did not word that question very well. There are two notices.....the HUD Counseling Notice and the Servicemember's Notice. HUD's rule clearly states Primary Residence. I'm trying to determine where this is stated with respect to the servicemember's notice and all I can find is a reference to a "mortgage loan" rather than to a "primary residence" as with HUD's rule.

Does the Servicemember's Notice only apply to the Servicemember's primary residence? Or does it apply to any loan secured by a mortage on real property?

If you've already provided the answer to the above question, I'm too dumb to see it. Perhaps you could state it differently.

Swiggles,
We have the same question that you do.
Plus, is the notice required if part of the collateral includes the residence (primary or not?). (i.e., loan is secured with tractor, truck, hay cutter AND the house)
Would that loan trigger the requirement? I'm thinking is would.

However, our BIG question is "Primary residence or ANY residence". We have a lot of rental property loans where the borrower is the Homeowner but the (collateral-residence) in NOT their primary.

Sooooo.....does anyone out there have an answer? Thanx in advance.

The notice requirement added for servicemembers is to "notify the homeowner by a statement or notice ... explaining the mortgage and foreclosure rights of servicemembers, and the dependents of such servicemembers, under the [SCRA], including the toll-free military one source number to call if servicemembers, or the dependents of such servicemembers, require further assistance." (12 USC 1701x(c)(5)(A)(ii), as amended by section 688 of Public Law 109-163).

The SCRA protections for servicemembers (50 App. USC §533) relate to a mortgage or deed of trust on any real or personal property. There is nothing there that limits those protections to primary residences, or even residences at all.

Accordingly, I believe that the notice is required regardless of whether the property is a primary residence of the homeowner.

You should note that the two references to "90 days" in the second bullet in the "What Legal Protections ...?" section of the notice should read "9 months" in any notice sent from 7/30/2008 until 12/31/2010.

The 90-day to 9 months change is temporary through 12/31/2010. Both changes were made by the Housing and Economic Recovery Act of 2008.

I have not yet seen anything from HUD updating the notice language for that change, but in my view you should adapt the notice to avoid misstating the servicemember's rights.

"Mortgage on any Real or Personal Property"

Would this include raw land?

The ML 2006-28 says the notice must be sent to "Homeowners".
This leads me to believe that the notice is applicable to "Improved" (with a home) real estate.

Is this a correct assumption or does the notice need to be sent to customers that have mortgages on real property (land only) loans too?
Thank you Sir...

Sorry, but I think that I'll have to beg off on that question. The answer, I am sure, hinges on the definition of "homeowner." But try as I might, I can't find the applicable definition in the National Housing Act. It does seem reasonable to say that "homeowner" could exclude a loan secured by raw land, but I'll need to find that definition before I'm really comfortable.

One more...

Does the notice requirement apply to business/commercial loans?
thanks,

Mr. Burnett,

In relation to the change of language from “90 days” to “9 months”, is this subject to new FHA qualified mortgages that are refinanced under the 90% appraised value write-down ONLY, or is it for all current qualified mortgages that have not been refinanced under this new program?



"FHA foreclosure rescue– development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 90% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008."

IF... it is only for loans refinanced under the new program, I would submit that a bank that participates in the new program would need two letters. One for 90 days and one for 9 months.

What say you?

The temporary change in SCRA from 90 days to 9 months (in two places) applies to all loans secured by real estate (even business loans), if a servicemember is a borrower.

The 90 to 9 change was triggered because of Section 2203 of the Housing and Economic Recovery Act of 2008. It isn't related to any particular loan program.

Hey John -

It has been a while since this thread was active, but do you believe the HUD/SCRA notice is required for commercial real estate loans. I agree with you that the protections of the SCRA extend to all types of real estate and not just residential real estate. However, as far as providing the SCRA/HUD notice due to delinquency, the sites I am looking at seem to restrict it to residential real estate, but perhaps this is because they are more focused on the HUD aspect rather than the SCRA. See the following that I got from https://www.hud.gov/program_offices/housing/sfh/nsc/qasscra1:

Pursuant to the statutory amendment, HUD has developed, in consultation with the Departments of Defense and Treasury, the form for the required notice of servicemember rights (Attachment 1, SCRA Notice Disclosure). All mortgage loans, including conventional mortgages and mortgages insured by HUD are subject to the notification requirement. The notice must:

**Be sent to all homeowners who are in default on a residential mortgage;**
Include the toll-free military one-source number to call if servicemembers or their dependents require further assistance (1-800-342-9647); and
Be made within 45 days from the date a missed payment was due, unless the homeowner pays the overdue amount before the expiration of the 45-day period.

It specifies "residential mortgage here ^

Your research is sound and that notice is for homeowners needing counseling to avoid loss of their home. I believe sending a notice that is for homeownership counseling would be misleading.

This is from a Fed Consumer Compliance Outlook publication from 1st Quarter 2013:

Homeownership Counseling Act
13. According to HUD’s Mortgage Letter 2006-28,
the SCRA notice is to be sent to all homeowners who
are delinquent on a residential mortgage. Could you
please clarify what meets the definition of a “residential
mortgage”? It clearly includes conventional
mortgages and mortgages insured by the Department
of Housing and Urban Development (HUD). But
does it include junior lien mortgages (home equity
loans/lines) and business loans that have a guarantor
who gives the bank a mortgage on his or her
personal residence? In other words, should the bank
send the notice to any individual homeowner with a
mortgage on a single-family residence regardless of
lien status or purpose?
The SCRA notice requirement at issue, imposed by the
Homeownership Counseling Act (12 U.S.C. §1701X(c)
(5)(A)), applies to loans secured by a mortgage or lien
on the principal residence of the person to whom the
notice must be given – whether open- or closed-end,
first- or second-lien, business purpose or consumer
purpose. The notice requirement is generally triggered
when a borrower applies for, or defaults on,
a home loan, defined as “a loan secured by a mortgage
or lien on residential property” secured by the
borrower’s or the applicant’s principal residence.

If anyone has a more recent interpretation, I'd like to know about them as it will be a challenge to send/explain the notice on a large commercial relationship that happens to include the guarantor's primary residence as collateral.