Sgt. John J. Savage III, an Army reservist, was about to climb onto a troop transport plane for a flight to Iraq from Fayetteville, N.C., when his wife called with alarming news: “They’re foreclosing on our house.”
Sergeant Savage recalled, “There was not a thing I could do; I had to jump on the plane and boil for 22 hours.”
He had reason to be angry. A longstanding federal law strictly limits the ability of his mortgage company and other lenders to foreclose against active-duty service members.
But Sergeant Savage’s experience was not unusual. Though statistics are scarce, court records and interviews with military and civilian lawyers suggest that Americans heading off to war are sometimes facing distracting and demoralizing demands from financial companies trying to collect on obligations that, by law, they cannot enforce.
Some cases involve nationally prominent companies like Wells Fargo and Citigroup, though both say they are committed to strict compliance with the law.
The problem, most military law specialists say, is that too many lenders, debt collectors, landlords, lawyers and judges are unaware of the federal statute or do not fully understand it.
The law, the Servicemembers Civil Relief Act, protects all active-duty military families from foreclosures, evictions and other financial consequences of military service. The Supreme Court has ruled that its provisions must “be liberally construed to protect those who have been obliged to drop their own affairs to take up the burdens of the nation.”
Yet the relief act has not seemed to work in recent cases like these:
¶At Fort Hood, Tex., a soldier’s wife was sued by a creditor trying to collect a debt owed by her and her husband, who was serving in Baghdad at the time. A local judge ruled against her, saying she had defaulted, even though specialists say the relief act forbids default judgments against soldiers serving overseas and protects their spouses as well.
¶At Camp Pendleton, Calif., more than a dozen marines returned from Iraq to find that their cars and other possessions had been improperly sold to cover unpaid storage and towing fees. The law forbids such seizures without a court order.
¶In northern Ohio, Wells Fargo served a young Army couple with foreclosure papers despite the wife’s repeated efforts to negotiate new repayment terms with the bank. Wells Fargo said later that it had been unaware of the couple’s military status. The foreclosure was dropped after a military lawyer intervened.