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Tell a Veteran to Miss a Payment to Qualify for a Short Sale and You May be Up Against the CFPB

Very important information.  I had a lender tell an active duty military to miss two payments before they would consider their short sale.  It was the "investors" policy.  Needless to say we pushed back hard and having this information is very helpful to pass along to a negotiator.

Statistically, over half of the Consumer Finance Protection Bureau (CFPB) complaints to the Office of Servicemember Affairs (OSA) have to do with mortgages.  Of these, 58 percent of them had to do with loan modification, mortgage collection practices or foreclosure . . . and yes . . . short sales would fall under this category.  While this is a broad range of complaints, I’d like to focus on servicemembers with Permanent Change of Station (PCS) orders and how they relate to short sales.

For Realtors processing short sales on behalf of servicemembers, they’ll want to know that the CFPB is particularly interested in loan servicers:

  • 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;
  • Failing to timely communicate the servicer’s decision regarding requests for assistance from homeowners with PCS orders and failing to include and explanation for the denial, where required.

*Source: Consumer Financial Protection Bureau and prudential regulators issue joint guidance to address mortgage servicer practices that impact servicemembers

While all 5 of these bullet points are useful in applying pressure to loan servicers who deserve it, it’s bullet point 3 that is of particular interest.  This is because while most loan servicers can’t force someone to be late in order to qualify for a short sale due to the Imminent Danger of Default rule, some persist in doing so and their internal policies now run afoul of the CFPB.  When this happens, giving up is no longer a suitable option.  You now have a friend in Holly Petraeus (yes, that Petraeus) at the CFBP.

To engage the OSA and CFPB in this type of a problem simply submit the complaint and it will follow this process:

CFPB OSA Complaint Flow

I can attest from personal experience that they are very fast and get results quickly (just ask the office of the president of B of A). J  Ensuring that things work out this way for servicemembers is essential for them because their PCS orders are binding and enforceable under short timeframes.  Ensuring that their short sale happens without them having a late payment on their mortgage is critical because, if it happens that way, they can buy immediately in their new location using VA or FHA financing and they sure deserve to be able to!

Charles Dailey - Branch Manager, Loan Officer, Certified Military Housing Specialist - iLoan - NMLS ID# 79048 - CA DOC, MN DOC & WI DFI - 612.234.7283


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If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

Military Relocation Specialist serving military families relocating to and from the Pentagon, Fort Belvoir, Quantico MCB and all of the Military District of Washington installations. 

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Comment balloon 3 commentsCindy Jones • May 06 2013 05:03PM

Comments

Cindy

Thanks for sharing a very informative re-post.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) over 5 years ago

This is such good information.  Any knucklehead out there telling Service Members not to pay need to wisen up a bit.  That's why it's so important to have a Realtor® who understands the military and the procedures necessary to do a short sale.  Great reblog Cindy!

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) over 5 years ago
You selected a very informative reblog for us to read over carefully.
Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 5 years ago

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