OCC Notifies Supervised Institutions of SCRA Temporary Extensions

In a recent bulletin (OCC Bulletin 2016-20), the OCC notified national banks, federal savings associations, and federal branches and agencies of foreign banks (i.e., OCC-supervised institutions) of the temporary extensions provided under the Foreclosure Relief and Extension for Servicemembers Act of 2015 (Pub. L. 114-142), signed into law by President Obama on March 31, 2016. Specifically, the Act extended, once again on a temporary basis, the duration of coverage from nine (9) months to one (1) year after a servicemember’s military service for SCRA Section 303 (50 U.S.C. § 3953) protections. The protections relate to obligations secured by a mortgage, trust deed, or other security similar to a mortgage on real or personal property owned by a servicemember, for such obligations that originated before the servicemember’s military service and for which he or she is still obligated.

Specifically, the protections have been extended as follows: (i) a sale, foreclosure, or seizure of property based on a breach of such secured obligation is not valid if made during the period of military service or within one (1) year thereafter, unless it is made pursuant to a court order or a waiver by the servicemember; and (ii) a court may (after a hearing and on its own motion) and will (upon application by a servicemember whose ability to comply with the obligation is materially affected by military service) stay the proceedings or adjust the obligation to preserve the interests of all parties at any time during the period of military service or within one (1) year thereafter.

This temporary extension to one (1) year ends December 31, 2017. Accordingly, unless another extension is enacted by Congress, beginning January 1, 2018, the timeframe for the coverage of this protection will revert to ninety (90) days after the period of military service.

The OCC bulletin also reiterated that HUD requires lenders to send a notice of servicemembers’ rights to borrowers within 45 days of the date a missed payment was due on a mortgage secured by the borrower’s principal residence, unless the borrower pays the past-due amount before the expiration of the 45-day period. HUD’s updated “Servicemembers Civil Relief Act Notice Disclosure” provides the contents of such notice and can be found at: http://portal.hud.gov/hudportal/documents/huddoc?id=92070.pdf.