H.R. 1263: To amend the Servicemembers Civil Relief Act to provide surviving spouses with certain protections relating to mortgages and mortgage foreclosures

H.R. 1263

To amend the Servicemembers Civil Relief Act to provide surviving spouses with certain protections relating to mortgages and mortgage foreclosures

Date
October 12, 2011 (112th Congress, 1st Session)

Staff Contact
Sarah Makin

Floor Situation

On Tuesday, October 11, 2011, the House is scheduled to consider H.R. 1263 under a suspension of the rules, requiring a two-thirds majority vote for passage.  The resolution was introduced by Rep. Bob Filner (D-CA) on March 30, 2011, and referred to the House Committee on Veterans’ Affairs. 

Bill Summary

H.R. 1263 would amend the Servicemembers Civil Relief Act to afford surviving spouses of servicemembers who die while in military service and whose death is service-connected the same protections against sale, foreclosure, and seizure of property currently applicable to their spouses who while in military service are unable to meet an obligation on real or personal property.

Specifically, H.R. 1263 would set additional requirements for lending institutions that are creditors for obligations and liabilities covered by the Servicemembers Civil Relief Act including, (1) Requiring each lending institution to designate an employee of the institution as a compliance officer who is responsible for ensuring the institution's compliance and for distributing information to servicemembers whose obligations and liabilities are covered; and (2) Requiring lending institutions with annual assets greater than $10 million to maintain a toll-free telephone number and make such telephone number available on the Internet website of the institution. 

H.R. 1263 would also extend the period of protections for servicemembers against mortgage foreclosures.  The bill would extend: (1) The stay of proceedings and the period of adjustment of obligations from within nine months to within 12 months; and (2) The period of relief from sale, foreclosure, or seizure from within nine months to within 12 months.  The bill would extend these protections until December 31, 2017, at which time, the provisions of the Servicemembers Civil Relief Act in effect prior to this Act would be revived.

Background

Military personnel are shielded from foreclosure on a residential mortgage for up to nine months after they leave active duty.  However, after January 1, 2013, the period during which foreclosures are deferred declines to 90 days.  The bill would increase that protection to a 12-month period, until December 31, 2017, after which the forbearance period would decline to 90 days.  The bill also would grant that same foreclosure protection to the surviving spouses of servicemembers who die on active duty.  The enhanced protections for surviving spouses would expire five years after enactment.

Cost

The Congressional Budget Office (CBO) estimates that enacting H.R. 1263 would affect direct spending; therefore, pay-as-you-go procedures apply.  Federal agencies such as the Department of Veterans Affairs and the Federal Housing Administration, which currently guarantee the mortgages of some servicemembers, are responsible for the payment of any interest that accrues on such a mortgage during the period between the stoppage of payments on the mortgage and the time the agency finally settles the loan with the originator.  Therefore, delaying certain foreclosures could result in additional costs to the federal government.  Because of the low number of affected mortgages, CBO estimates that such costs would be insignificant. 

The bill would impose intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) by adding and expanding protections for servicemembers as authorized under SCRA.  CBO estimates that the costs to public and private entities of complying with the mandates would be small and would not exceed the thresholds established in UMRA for intergovernmental and private-sector mandates ($71 million and $142 million, respectively, in 2011, adjusted annually for inflation).