How can SCRA help servicemembers through foreclosure?
If a lender elects to judicially foreclose on a property then the borrower may, within 12 months after the trustee sale date, “redeem” the property by paying the amount of the highest bid at the trustee auction. During this 12-month redemption period the borrower may continue to reside in the home. (Note that, in Washington state, that this right of redemption does not apply in the majority of cases, as most lenders foreclose non-judicially).
Within the context of a judicial foreclosure lawsuit, the SCRA generally provides the servicemember with three types of relief:
- a stay (delay) of the foreclosure proceedings, or an extension of the maturity date of the loan, along with reduced monthly payments;
- where foreclosure judgment has already been ordered, reopening the case and “undoing” the foreclosure;
- and where a sale has taken place under a judgment of foreclosure, the redemption period may be extended during the servicemember’s period of military service. This means the time during which you can reclaim your home by paying back the full amount of the mortgage loan, plus legal costs and fees, is extended.
The foregoing rights are only relevant to the extent that you want to put a stop to foreclosure and only if your goal is to remain in the home. For some people, however, it may make more financial for them to get rid of the underwater property, for example, via a short sale.
What if I am asked to sign a waiver of my SCRA rights in order to get a short sale approved?
If your objective is to walk away from the property or you wish to undertake a short sale, then the rights under the SCRA won’t necessarily provide you with a great deal of meaningful protection.
Lenders may require that a servicemember sign a Waiver of Rights Under the SCRA in order to approve a short sale and complete the transaction. What is a homeowner really “giving away” by signing such a waiver?
The most important rights that one would be waiving by signing the release include the protections against foreclosure and the right of redemption, both described above. In Washington State, these rights become largely irrelevant if the homeowner wishes to walk away from the property. The rights are intended to protect military homeowners who wish to keep their homes, rather than those who want to start fresh so that they may “move to freedom.”
In most cases, within a short sale transaction, signing such a waiver would result in only a very limited release of one’s rights. The waiver of rights would only apply to that particular property and only if the short sale actually closes.
If you have additional questions about how the SCRA applies to you, you should consult with your Judge Advocate General or other military lawyer. Military legal assistance attorneys are available to provide guidance on the SCRA. You can also read the entire Act here: Servicemembers Civil Relief Act (SCRA)
Seattle Short Sales has the most experienced and most successful real estate short sale specialists working with us. We close, on average, 15% of all short sales per month in King County. In the last 24 months, we have negotiated over 756 short sale approvals, and discounted over $81 million of mortgage debt for distressed homeowners.
A short sale can improve your credit, and help you to avoid foreclosure and get a fresh start. As part of our service, we offer unlimited attorney and CPA consultations.
If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/
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