Michigan Judges Guide to the Servicemembers Civil Relief Act

5.3.2.5. Conditional Stay
To “preserve the interests of all parties,” 110 the court may grant
the servicemember conditional relief. Typically, this type of
relief involves a stay of foreclosure proceedings conditioned
upon the servicemember making regular, partial payments on
the outstanding debt. 111
5.3.2.6. Subsequent Good Faith Purchasers
Servicemembers may not be able to recover property sold to a
good faith purchaser. The Act protects the rights of subsequent
good faith purchasers by stating that vacating, setting aside, or
reversing any default judgment under the Act will not impair
any right or title acquired by a bona fide purchaser for value. 112
5.3.3. Limitations on Contract Fines and Penalties
Where an action to enforce a contract has been stayed, it is impermissible
for the contract holder to assess fines or penalties for a servicemember’s
failure to comply with the contract during the period of the stay. 113 The
reviewing court also has discretion to reduce or waive penalties or fines
resulting from a servicemember’s nonperformance under a contract where:
(a) The servicemember was in military service at the time the penalty or
fine was assessed; and
(b) The servicemember’s ability to perform under the contract was
“materially affected” by military service. 114
5.3.4. Penalties
A person who knowingly makes or causes a sale, foreclosure, or seizure of
property that is prohibited under the Act, or knowingly attempts to do so,
110 Id. at § 533(b)(2).
111 See, e.g., Fed Nat’l Mortgage Ass’n v Deziel, 136 F Supp 859 (ED Mich, 1956) (granting a stay of
foreclosure proceedings conditioned upon the servicemember making a payment of $100 each month for one year).
See also, Nassau Savings & Loan Ass’n v Ormond, 179 Misc 447; 39 NYS2d 92 (NY Sup Ct, 1942) (granting a stay
of mortgage foreclosure proceedings on the condition that servicemember’s dependent pay a monthly sum to
plaintiff).
112 50 USC App § 521(h).
113 Id. at § 523(a).
114 Id. at § 523(b).