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For those of you on active-duty in the military, there is a tool you may be able to utilize to protect your home against foreclosure while you are deployed. The law is called the federal Servicemembers’ Civil Relief Act (SCRA) and it bars foreclosures on active-duty members without a court order.
This law becomes relevant to active-duty service members because the process of deployment is often stressful to a family, and prior to deployment, general everyday activities (such as checking the mail or responding to bills) sometimes get put off temporarily.
The problem is that in Texas, a holder of a mortgage in default is able to move forward with what is called a “non-judicial foreclosure.” This means that the lender or the servicer of the note (according to its terms) is able to foreclose on the mortgage without needing to resort to a court system to sue and obtain a court order. Instead, the bank mails a notice of default, it waits 21 days, and then mails a notice that they will be selling the home at the next foreclosure sale the first Tuesday of the coming month (assuming there is another 21 days between the day of the foreclosure sale notice and the foreclosure sale itself, otherwise it will be sold the following month).
This can be a problem for military officials and soldiers whose home lives might be in disarray days or weeks before deployment. Not paying attention to the mail might cost them their home and might leave their families and children homeless.
This was the experience of an Army National Guard Capt. in Frisco, TX until they found a LA attorney familiar with the SCRA who was able to help them. (See the “Consumer Watch: Front-line foreclosure” article in the Army Times written by Karen Jowers.)
It should be pointed out that the army family’s paid-in-full home was sold at the foreclosure sale for only $3,600, and it was subsequently flipped to a purchaser who paid $135,000 for the home. This should serve as a warning and a pointer that even though the fair market value of the home likely exceeded $135K, it still sold for only $3,600. *IF* the family owed $135K on the mortgage and this were the case, the bank would likely come after the homeowners for $131,400 plus attorneys fees and costs (the difference between $135K and $3,600).
How is this? In Texas, should a home be sold at a foreclosure sale for less than what is owed on the mortgage, the lender may still sue the homeowner for the difference between what is owed and what the home sold for. This is called a “deficiency judgment.” Even if the lender does not sue immediately after the foreclosure, the homeowner may not rest easy because the bank has four years to pursue a deficiency judgment.
Thus, we should be thankful that the Federal Servicemembers’ Civil Relief Act is in existence. Why? Because the SCRA shields property both against debts accrued before being called to active duty and during the military service itself.
[This article is written by Robert Z. Cashman, Esq., owner of the Cashman Law Firm, PLLC. Robert is a foreclosure defense attorney in Houston, TX and patent attorney licensed by the USPTO. Information in this article should not be construed as legal advice; it may be outdated and/or incomplete. As such, it is strongly suggested that you contact a foreclosure attorney to answer your questions.]