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CFPB, DOJ Caution Servicers to Protect Military Borrowers

The Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) have issued two letters regarding important legal housing protections for military families.

One letter was sent to mortgage servicers regarding military borrowers who have already exited or will be exiting COVID-19 mortgage forbearance programs in the coming weeks and months, and the second letter to landlords and other housing providers regarding protections for military tenants.

The letter to servicers comes after complaints were filed from military families and veterans on a range of mortgage servicing violations, including inaccurate credit reporting, misleading communications to borrowers, and required lump sum payments for reinstating their mortgage loans. The complaints have been reviewed for compliance by the CFPB with the Coronavirus Aid, Relief, and Economic Security (CARES) Act and other applicable requirements.

The second letter, aimed at landlords and other housing providers, reminds property owners of the important housing protections for military tenants, some of whom may have had to relocate or make other changes to their housing arrangements in response to the pandemic. While military families enjoy the same legal protections and privileges afforded to all other homeowners and tenants, they also have additional housing protections under the Servicemembers Civil Relief Act (SCRA), which is enforceable by the DOJ and servicemembers themselves.

“The illegal foreclosures of military families in the last crisis was one of the financial industry’s worst failures,” said CFPB Director Rohit Chopra. “The CFPB will be closely watching mortgage servicers and will hold them accountable for illegal tactics perpetrated against military families.”

Estimates show that throughout the pandemic, approximately 7.6 million homeowners entered forbearance plans. While a majority have resumed their regular mortgage payments, nearly 1.25 million borrowers–many of whom are military borrowers–remain in forbearance programs that will expire at the end of 2021.

“The Department of Justice takes seriously its responsibility to safeguard the rights of servicemembers and veterans,” said Assistant Attorney General Kristen Clarke. “While servicemembers carry the great burdens of this nation, they should not have to worry that their sacrifices will result in economic harm to their families. Mortgage servicers and landlords must ensure that they are in full compliance with federal laws intended to protect servicemembers and their families during military service.”

More than 10 years ago, some large financial institutions illegally seized the homes of military families, violations because of breakdowns in the mortgage servicing industry that were severe and widespread. The result was numerous settlements with regulators, including a $186 million settlement between DOJ and some of the country’s largest mortgage servicers.

The CFPB and DOJ are calling on mortgage servicers and landlords to ensure that military homeowners and tenants are safeguarded during the pandemic, and benefit equally from the nation’s economic recovery.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.

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