YOUR MORTGAGE : WW II Legislation Helps Reduce GIs’ Bills : Relief: Members of the armed forces are eligible for an interest reduction on their home loan. Some banks are doing even more.
With nearly 500,000 Americans involved in the Persian Gulf war, it’s easy to understand why we’ve been getting letters from servicemen and women and their loved ones asking if they’re eligible for “mortgage relief.”
Norma Dale, a San Diego resident whose reservist son was recently sent to the Gulf, said she heard about a federal law that allows service personnel to reduce their mortgage payments.
“If it’s true, how do you qualify?” she writes.
It’s true. Under the Soldiers’ and Sailors’ Civil Relief Act of 1940, reservists and members of the National Guard called to active duty can have the rate on their home loan reduced to 6%. So can any full-time member of the armed services, as long as their debt was incurred before they joined up.
If a service member leases his or her home, the act prevents a landlord from evicting them or their family for non-payment of rent.
Perhaps the most significant caveat about the Civil Relief Act is that the service member must show that his ability to pay his debts is “materially affected” by his active-duty status. For example, if a soldier makes more money in the Army than on his regular job, he won’t qualify for relief.
Importantly, the 6% interest-rate cap doesn’t only apply to home mortgages. It also extends to credit-card debt, auto loans and the like.
Obtaining the rate reduction allowed by the act is relatively easy, said Kathy Ross, a spokeswoman for the U.S. Army.
“The important thing to remember is that the reduction isn’t automatic,” Ross said. “You’ve got to notify the lender first that you’ve been ‘called up’ and that you want the relief you’re entitled to.”
Ross suggests that servicemen and women put their requests in writing.
“Attach a copy of your activation orders to prove that you’re being called to duty. Then attach a copy of your earnings statements as a civilian and documentation that shows how much you’ll make in the service. The lender will do the rest of the work.”
With few exceptions, Ross added, lenders can’t foreclose on a home owned by a family member who has been called to active duty.
The act allows renters who are called to break their lease if they give their landlord 30 days’ written notice. It also prevents renters from being evicted for non-payment resulting from a household member’s being called to duty.
However, the act does not provide for a rent reduction or forgiveness of rental debts. That is left up to the service member to work out with his landlord.
Military personnel--including newly activated reservists--who come from areas where housing costs are high can also qualify for supplemental payments to help meet their family’s housing expenses while they’re away, Ross said.
For example, the Army offers a “variable housing allowance” to soldiers from high-cost areas that can amount to several hundred dollars a month.
The allowance is based on rank and the city where the reservist or full-time soldier’s unit normally drills. An entry-level private called up from pricey Los Angeles could qualify for a VHA of $162 a month, but a colonel who hails from the less-expensive Barstow area could get just $44.
Reservists, members of the National Guard and their families can obtain further information about the Soldiers’ and Sailors Relief Act and supplemental payments from their unit’s legal-assistance officer. Or they can call their toll-free Operation Desert Storm hot line.
The Army hot line is (800) 874-8451; Navy, (800) 255-3808; Marines, (800) 523-2694; Air Force, (800) 221-2343; and National Guard, (800) 348-4991.
Lenders have the right to challenge a service member’s request for relief in court, most often based on a comparison of military salary with that of the service member’s regular job, said Capt. Gary Owens, attorney with the New York Army National Guard.
Fortunately, few lenders are squabbling with provisions of the act. In fact, many lenders are actually being more generous than federal law requires.
Bank of America, the nation’s second-largest banking operation, has announced that qualifying reservists may defer loan payments on any type of account until they return from duty.
Likewise, Wells Fargo is deferring payments from active reservists or their families, and has eliminated charges on their checking accounts.
“About 1,000 reservists have taken advantage of the program so far, and we’ve got another 100 or so applications pending,” said Kim Kellogg, a Wells spokeswoman.
“We just felt that it was the right thing to do,” she said. “If these people are putting their lives on the line to defend our country, the last thing they should need to worry about is meeting their bills back home.”
1990 SOUTHERN CALIFORNIA MARKET SHARE Residential Purchase Loans*--ranked by millions of dollars.
in millions 1990 Lending Loan of Mkt. ’89 ’89 Rank institution count dollars share rank percent 1 Great Western 24,307 $3,459 8.65% 1 8.57% 2 Home Savings 14,888 2,745 6.86 2 6.40 3 Bank of America 10,199 2,142 5.36 3 3.42 4 California Federal 4,602 1,201 3.00 7 2.05 5 World Savings 6,240 1,135 2.84 5 3.17 6 American Savings 5,887 1,124 2.81 8 2.02 7 Home Fed Bank 5,780 995 2.49 4 3.28 8 Directors Mortgage 6,811 837 2.09 18 1.49 9 IMCO Realty Svcs 4,884 760 1.90 9 1.98 10 Coast Fed Bank 3,976 759 1.90 16 1.57 11 Glendale Federal 3,641 712 1.78 13 1.64 12 Countrywide Funding 4,620 710 1.78 17 1.55 13 Western Federal 3,681 695 1.74 14 1.60 14 State Street Bank 110 628 1.57 na na 15 Security Pacific 3,083 619 1.55 6 2.82 16 Citibank 2,834 599 1.50 na na 17 Great American 3,954 594 1.48 11 1.82 18 Weyerhaeuser Mtg 3,494 547 1.37 15 1.58 19 Plaza Savings 3,367 523 1.31 20 0.99 20 Sears Mortgage 2,166 421 1.05 19 1.00 21 Wells Fargo 1,760 398 1.00 10 1.82 22 Franklin Mtg 2,281 353 0.88 27 0.62 23 First Federal S&L; 1,966 341 0.85 22 0.83 24 Guardian S&L; 3,132 340 0.85 36 0.50 25 American Res Mtg 2,083 334 0.84 33 0.56 26 Western Bank 2,554 300 0.75 38 0.49 27 First Franklin Financial 1,692 289 0.72 29 0.60 28 NEMAC 770 286 0.71 na na 29 GMAC Mortgage 1,879 279 0.70 31 0. 30 Prudential Home Mtg 937 237 0.59 na na 31 First Nationwide 1,263 236 0.59 23 0.68 32 Citicorp S&L; 1,093 221 0.55 12 1.73 33 First California Mtg 1,638 215 0.54 45 0.38 34 Chase Home Mtg 741 214 0.54 35 0.51 35 Loan America Fin 1,127 201 0.50 41 0.44 36 Imperial Bank Mtg 1,155 200 0.50 75 0.20 37 Household Bank 670 184 0.46 39 0.46 38 United Savings Bank 1,132 180 0.45 32 0.56 39 Western Ctys Mtg 1,276 167 0.42 47 0.36 40 Southern Cal S&L; 806 160 0.40 54 0.30 Other 90,464 $12,358 30.90% Total 238,943 $38,700
* Properties 1-4 units with residential-use codes Source: The Dataquick Report
AVERAGE RATES FOR RESIDENTIAL MORTGAGES Average rates for residential mortgages as of Feb. 8, 1991
Survey Conventional Mortgages Adjustable Mortgages Area 15 Year 30 Year Composite 1 Year Composite National 9.15% 9.47% 9.32% 7.56% 7.86% California 9.42 9.71 9.58 7.85 7.90 Connecticut 9.17 9.47 9.35 7.60 7.80 Wash. D.C. 8.98 9.35 9.18 7.17 7.44 Florida 9.12 9.47 9.31 7.52 7.82 Mass. 9.17 9.46 9.32 7.53 7.9515 New Jersey 9.19 9.46 9.34 7.52 7.99 N.Y. Metro 9.24 9.54 9.41 7.61 7.96 New York 9.33 9.65 9.51 7.68 7.99 N.Y. Co-ops 9.63 9.85 9.81 7.95 8.31 Pa. 8.88 9.22 9.07 7.38 7.52 Texas 9.01 9.30 9.16 7.67 7.76
SOURCE: HSH Associates, Butler, N.J.
