Five federal agencies – the Consumer Financial Protection Bureau, Federal Reserve System, Federal Deposit Insurance Corp., National Credit Union Administration, and Office of the Comptroller of the Currency – have issued a joint guidance to address mortgage servicer practices that may pose risks to homeowners who are serving in the military.
The guidance, which is intended to ensure compliance with applicable consumer laws and regulations, pertains to military homeowners who have received Permanent Change of Station (PCS) orders, which occur when a servicemember is ordered by the military to relocate to a new installation. Roughly one-third of active-duty servicemembers receive PCS orders each year.
The interagency guidance addresses practices including the following:
- Failing to provide servicemembers with PCS orders who notify their servicers of such orders with accurate, clear, and readily understandable information about available assistance options for which the homeowner may qualify based on the information known to the mortgage servicer;
- Asking servicemembers with PCS orders to waive their legal rights under the Servicemembers Civil Relief Act or any other law as a prerequisite to the mortgage servicer either providing information about available options or evaluating the servicemember's eligibility for assistance;
- Advising homeowners with PCS orders who are current on their loans and able to make the monthly payment to intentionally skip making payments in order to create the appearance they are having financial difficulties in order to obtain assistance for which they would not otherwise qualify;
- Failing to provide a reasonable means for servicemembers to find out information about the status of their request for assistance; and
- Failing to timely communicate the servicer's decision regarding requests for assistance from homeowners with PCS orders and failing to include an explanation for the denial, when required.
If a regulator determines that a mortgage servicer has engaged in improper practices, it will take appropriate enforcement action. The Federal Housing Finance Agency and the U.S. Departments of Agriculture, Defense, Housing and Urban Development, Justice, Treasury, and Veterans Affairs have announced their support for the interagency guidance.