We have a mortgage loan in which there is a non-obligor who pledged his residential real estate as collateral and now the loan is moving into foreclosure. The regulation states the following:

§ 533. Mortgages and trust deeds [Sec. 303]
(a) Mortgage as security. This section applies only to an obligation on real or personal property owned by a servicemember that-¬
(1) originated before the period of the servicemember's military service and for which the servicemember is still obligated; and
(2) is secured by a mortgage, trust deed, or other security in the nature of a mortgage.

Since the non-obligor owns the real estate property, should the Bank check the DMDC site on the owner of the property prior to foreclosure to determine if the person qualifies for SCRA relief? The problem we see is lack of identifying data for a non-obligor. Generally, a Bank would not obtain a social security number or date of birth to be able to check the DMDC site, because the collateral owner is not a customer. Is it sufficient enough to check our files to determine if we have that information and if not move forward with the foreclosure? Or is the bank obligated to find a SSN/DOB in order to pull the DMDC.

This situation has come up for us as well....any guru feedback would be appreciated

Also, would the SCRA HUD Notice need to be sent to the non-obligor? HUD handbook only addresses borrowers, but the HUD Q & A says ALL homeowners.

Please HELP!

We have had this question come up as well. If anyone has any feedback would love to hear.

Maybe this one is being debated at a higher level....

There was a similar question relating to a servicemember pledging their car as collateral for a loan made to their wife on the ABA's compliance newsbyte this morning. The answer they gave was that you'd need to get the courts permission to repo the car when the loan went bad. So if you apply the same concept to real estate I'd think you want to check the database before foreclosing on the home. I don't think them not being a customer is going to matter.

Here is my answer, you have no idea if the property owner has enlisted and is a protected servicemember and therefore the DMDC database should ALWAYS be checked. It is possible you'll reply that the owner is 70 years old and wouldn't be eligible. That may be the case, but if the owner is 30, I'd be checking.

The attorney handling the foreclosure may be required to advise the court that the borrower is in fact not SCRA protected. I would advise them the borrower who is not an owner is protected as there may be some extra steps to follow to reach for any deficiency amounts after the sale.

Oh, to add to the can of worms, if dad was 70, passed away and left the land to his child who is now in the service, where does that put the case? That's a legal question I couldn't opine on.

Or, what if Dad happens to be a dependent of a servicemember? Could happen, I would think.

I would like some advice on how to run on a DMDC check on the non-borrower when we don't have their SSN or DOB. I agree that we need to know if they are active duty and protect by SCRA but without those important pieces of information, you can't perform the check.

Good thoughts everyone and thank you;

I think if you don't have the SSN/DOB information and/or can't obtain before foreclosing it would make the difference of whether or not one would file as judicial or non-judicial case [your legal dept. can explain the difference]. Then going forward from now put something in place to get that information.

...but there would be an issue with not providing the HUD/SCRA disclosure to the non-borrowing homeowner in a timely manner and what would the penalty be for not doing that?

I have talk to some of the other area banks and servicers are not very willing to house the non-borrower info in their system setup in order for delinquency notices containing the disclosure requirements to be sent to all parties involved--generally only the borrower/co-borrowers receive notices. We've been working with our service for most of this year to get just this small step done and they still don't agree that it should be done.