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Helping Veterans Today — But Not After December 31, 2010

by Peter G. Miller
August 13th, 2008

What started out as an FHA mortgage reform measure has concluded with various additions. One of the best concerns foreclosure help for veterans — but help with both good news and bad news.

It used to be that service members were protected against foreclosure actions while on active duty and for 90 days thereafter. Under the new legislation the protection period has been extended to nine months.

As well, the 6-percent interest-rate limitation has been extended for a year following active-duty military service.

This is good stuff. It reflects part of a moral obligation to assure that those who are in the military are treated fairly at home.

Yet strangely, and it is strange, the extensions and benefits found in the FHA mortgage reform bill expire on December 31, 2010 — at which point we go back to the old rules.

You have to wonder about this. Who benefits from this sunset provision, shareholders and managers of some giant corporation or members of the armed services who are risking their lives to defend the country?

In 2003 I wrote that we ought to make military incomes tax-free. That would represent an instant pay increase and thus another inducement to enter the all-volunteer military. It would also be a decent thing to do. At least veteran’s education benefits are improving under the new gi bill– and these benefits have no end date in sight.

Language from the new legislation is below:

SEC. 2203. ENHANCEMENT OF PROTECTIONS FOR SERVICEMEMBERS RELATING TO MORTGAGES AND MORTGAGE FORECLOSURES.

(a) EXTENSION OF PERIOD OF PROTECTIONS AGAINST MORTGAGE FORECLOSURES.—

(1) EXTENSION OF PROTECTION PERIOD.— Subsection (c) of section 303 of the Servicemembers Civil Relief Act (50 U.S.C. App. 533) is amended by striking
“90 days” and inserting “9 months”.

(2) EXTENSION OF STAY OF PROCEEDINGS PERIOD.— Subsection(b) of such section is amended by striking “90 days” and inserting “9 months”.

(b) TREATMENT OF MORTGAGES AS OBLIGATIONS SUBJECT TO INTEREST RATE LIMITATION.— Section 207 of the Servicemembers Civil Relief Act (50 U.S.C. App. 527)is amended—

(1) in subsection (a)(1), by striking “in excess of 6 percent” the second place it appears and all that follows and inserting “in excess of 6 percent—

“(A) during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or

“(B) during the period of military service, in the case of any other obligation or liability.”; and

(2) by striking subsection (d) and inserting the following new subsection:

“(d) DEFINITIONS.— In this section:

“(1) INTEREST.— The term ‘interest’ includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.

“(2) OBLIGATION OR LIABILITY.— The term ‘obligation or liability’ includes an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage.”.

(c) EFFECTIVE DATE; SUNSET.—

(1) EFFECTIVE DATE.—The amendment made by subsection

(a) shall take effect on the date of enactment of this Act.

(2) SUNSET.—The amendments made by subsection (a) shall expire on December 31, 2010. Effective January 1, 2011, the provisions of subsections (b) and (c) of section 303 of theServicemembers Civil Relief Act, as in effect on the day before the date of the enactment of this Act, are hereby revived.

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