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H.R. 3221 –DIVISION B - TITLE II – MORTGAGE FORECLOSURE PROTECTIONS
FOR SERVICEMEMBERS
MAXIMUM GUARANTEE – The legislation would increase the maximum loan guaranty
amount for certain housing loans that are guaranteed by the Department of Veterans Affairs, and
which are originated beginning on October 1, 2008 until December 31, 2008. The maximum
guaranty amount on these loans means an amount equal to 25 percent of the higher of: (1) the
limitation determined under section 305(a)(2) of the Federal Home Loan Mortgage Corporation
Act (12 USC 1454(a)(2)) for the calendar year in which the loan is originated for a singlefamily
residence; or (2) 125 percent of the area median price for a single-family residence,
subject to a cap of 175 percent of the limitation determined under section 305(a)(2) for the
calendar year in which the loan is originated for a single-family residence. This loan amount
would equal a maximum of $729,750.
PREVENTING FORECLOSURES FOR SERVICMEMBERS – The legislation requires the
Secretary of Defense to develop and implement a program to advise members of the Armed
Forces (including the National Guard and Reserves) who return from active duty service abroad,
on actions the servicemembers should take to prevent or forestall mortgage foreclosures. The
program must include: (1) credit counseling, (2) home mortgage counseling, and (3) such other
counseling and information as the Secretary of Defense considers appropriate. This counseling
and information shall be provided to the servicemembers as soon as practicable after their return
from active duty service abroad.
EXTENSION OF PROTECTIONS AGAINST FORECLOSURE – The legislation extends
from 90 days to 9 months following a servicemember‘s military service the protection against a
sale, foreclosure, or seizure of property secured by a mortgage, trust deed, or other security in the
nature of a mortgage, when there is a breach of the obligation. This does not change the
requirement that the obligation on the property must have been originated before the period of
the servicemember‘s military service. Similarly, the period of time relating to filing an action for
a stay of proceedings and adjustment of a servicemember‘s mortgage obligation would be
extended from 90 days to 9 months following military service. These provisions would become
effective upon enactment and sunset on December 31, 2010.
EXTENSION OF INTEREST RATE LOCK – The legislation also extends the period of time
a servicemember can have the interest rate on a mortgage obligation or liability reduced to no
more than 6 percent per year, to the period of military service, and one year thereafter. This does
not change the requirement that the mortgage obligation or liability must have been incurred
before the servicemember enters military service. The reduced interest rate for all other
obligations would continue to be only during the period of military service.
Interest, obligation and liability are defined.
AMERICAN BANKERS ASSOCIATION 13