Lawmakers want more for struggling military homeowners

Reuters News
Posted: Sep 27, 2011 2:48 PM
Lawmakers want more for struggling military homeowners

By Margaret Chadbourn

WASHINGTON (Reuters) - A dozen Democratic lawmakers in the House of Representatives are urging regulators to give members of the military full access to federal programs for troubled homeowners and to look for other measures to help service members hit by the weak real estate market.

The lawmakers specifically asked the Treasury Department and federal regulators to review the challenges of military members forced to relocate for work and risk losing their homes.

Their letter was addressed to Treasury Secretary Timothy Geithner and three financial regulators, including the Securities and Exchange Commission, the Federal Housing Finance Agency, and Department of Housing and Urban Development.

"Service members and their families are often unable to sell their homes quickly at prices that will enable them to pay off their mortgages, and they cannot generate enough rental income to cover their mortgage," the lawmakers wrote.

The government's mainstay effort to stabilize housing for the past two years, the Home Affordable Modification Program, aims to help those so-called "underwater" borrowers take advantage of record-low interest rates to reduce their monthly payments and prevent foreclosure.

However, the lawmakers argued those serving in the military are not qualifying for many of the government programs to help borrowers modify their loans as they are often making timely mortgage payments.

Service members are finding it hard to sell their properties fast enough to pay off their mortgages in the weak real estate market, the lawmakers said, and as a result are unable to make up the cost in rental income.

If they opt for delinquency or foreclosure, the lawmakers contended, their credit suffers and their future assignments and performance evaluations are jeopardized by weaker credit histories.

The lawmakers also said that foreclosure prevention initiatives are open only to homeowners' primary residences. Those type of standards are restrictive and have caused some service members to relocate without their families when they receive new assignments that require moving towns quickly, according to the letter from the lawmakers.

"To address these concerns, we ask that you review these problems comprehensively and develop specific initiatives to address the unique needs of military service members," the lawmakers wrote.

As mortgage defaults have surged since the housing market collapsed, foreclosures in towns where soldiers are stationed are climbing at a faster pace than the national average.

"We write to urge you take action to protect families who have been particularly hard hit by the ongoing foreclosure crisis," the letter read, signed by more than nine House lawmakers, and spearheaded by Rep. Elijah Cummings, a Democrat from Maryland and ranking member of the Oversight and Government Reform Committee, along with Rep. Adam Smith of the Armed Services Committee, a Democrat from Washington.

(Reporting by Margaret Chadbourn; Editing by Chizu Nomiyama)