ALEXANDRIA, Va. (6/29/12)--The National Credit Union Administration (NCUA) in a letter to credit unions outlined the steps that credit unions should take when mortgage-holding servicemembers are given Permanent Change of Station (PCS) orders.
The NCUA letter (12-CU-07) referenced a recently released document: Interagency Guidance on Mortgage Servicing Practices Concerning Military Homeowners with Permanent Change of Station Orders. Any credit union responsible for managing a military member's mortgage loan account, including collecting and crediting monthly payments, acts as a mortgage servicer and needs to follow the new guidance, the NCUA said.
Servicemembers that have received PCS orders remain accountable for their financial obligations, including their mortgages, when they move, and may need to continue paying their mortgage if their home goes unsold, the NCUA noted.
The NCUA letter suggested that credit unions and other financial institutions give homeowners facing relocation clear, easily understandable information outlining various homeowner assistance options. Financial institutions should also advise homeowners on how they can track the status of any ongoing assistance efforts, and should provide their own assistance status updates.
Those updates can include a detailed explanation of why a request for homeowner assistance may have been denied, and how borrowers can avoid being denied assistance in the future, the agency said.
Credit unions should not advise or ask homeowners to waive their rights under the Servicemembers Civil Relief Act or other laws as a prerequisite to providing information about other available options or evaluating eligibility for assistance, the NCUA said. Credit unions also should not advise homeowners that have had no previous issues paying their loans to stop making payments in a bid to qualify for assistance, the agency added.
The NCUA said credit union officials should discuss the guidance with agency examiners as they develop or enhance their mortgage lending programs.
Supervisory and/or enforcement actions could be taken against mortgage servicers that engage in any acts or practices that are unfair, deceptive, or abusive, or that otherwise violate federal consumer financial laws and regulations, the guidance warned.
"Every military homeowner with PCS orders deserves appropriate assistance and accurate advice during this period of heightened financial vulnerability," NCUA Chairman Debbie Matz said, noting that "credit unions have an excellent track record providing mortgage financing and servicing to our military personnel."
For the letter to credit unions, use the resource link.