In an attempt to increase the financial protections the federal government provides for servicemembers, one U.S. senator is now holding hearings on what may be done to give military members more peace of mind when they get deployed.
U.S. Sen. Richard Shelby of Alabama recently held a hearing on the ways in which the government can do more to protect troops when they receive transfer orders on short notice, according to a report from Medill News Service. Shelby, the top Republican on the Senate’s committee for Banking, Housing and Urban Affairs, notes that many servicemembers who receive these orders may be in a position where they end up facing significant financial burdens because of the tough housing market.
“Under such circumstances, service members are faced with continuing to pay a mortgage for a house that they no longer live in or default on their loans,” Shelby told the news agency.
In the past, military members who owned their homes did not qualify for short sales on those properties. This led many who could not find a buyer on relatively short notice to pay two mortgages, or face the myriad problems that come with foreclosure, the report said. Fortunately, a number of reforms have taken place over the last few months that allow a bit more protection for servicemembers.
For instance, the Federal Housing Finance Agency, which oversees government sponsored home loan backing enterprises Fannie Mae and Freddie Mac, changed its short sale policy for military members in June, the report said. Now, those consumers are able to conduct a short sale regardless of whether they are up to date on all their mortgage payments.
Further, 49 of the states’ attorneys general recently procured a sizable settlement from the nation’s five largest mortgage servicing financial institutions for issues specifically related to military families. Part of that settlement included banks taking into account permanent change of station orders for military members when they decide to allow short sales, and deed and loan modifications.
While these options may not be ideal and can do some amount of damage to a military member’s credit rating, they are typically desirable when compared with foreclosure, which can lead to a slew of problems that can be difficult to remediate in either the short- or long-term.
Image: Mike Baird, via Flickr