President Obama recently signed into law the renewal of the “Foreclosure Relief and Extension for Service Members Act of 2015.” The renewal of the law allows a court to stay – for one year after a service member’s military service – any proceeding that enforces an obligation on real or personal property owned by a service member taken on before military service. It also invalidates any sale, foreclosure, or seizure of any service member’s real or personal property for which a court order has not been obtained or waiver signed by the service member. These protections shall extend through 2017.
The new 50 U.S.C. § 3953 should read as follows (anticipated amendments are highlighted):
(a) Mortgage as security
This section applies only to an obligation on real or personal property owned by a service member that–
(1) originated before the period of the service member’s military service and for which the service member is still obligated; and
(2) is secured by a mortgage, trust deed, or other security in the nature of a mortgage.
(b) Stay of proceedings and adjustment of obligation
In an action filed during, or within one year after, a service member’s period of military service to enforce an obligation described in subsection (a), the court may after a hearing and on its own motion and shall upon application by a service member when the service member’s ability to comply with the obligation is materially affected by military service–
(1) stay the proceedings for a period of time as justice and equity require, or
(2) adjust the obligation to preserve the interests of all parties.
(c) Sale or foreclosure
A sale, foreclosure, or seizure of property for a breach of an obligation described in subsection (a) shall not be valid if made during, or within one year after, the period of the service member’s military service except–
(1) upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or
(2) if made pursuant to an agreement as provided in section 3918 of this title.
A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in Title 18 or imprisoned for not more than one year, or both.
Effective January 1, 2018, the prior nine-month period in place of the one-year period granted by the Act shall be restored.
The significance of this change is self-evident and all foreclosure staffers and counsel at any servicer of all of the different debt classes should be familiar with the substantive change in the law. Boilerplate forms and notices containing reference to SCRA regulations should also be amended to reflect the modification in the law.