Jun 26 2012
U.S. Senator Richard Shelby (R-Ala.), ranking Republican on the Committee on
Banking, Housing and Urban Affairs, today made the following statement at a
hearing on empowering and protecting servicemembers, veterans and their
families in the consumer financial marketplace.
Statement of Senator Richard C. Shelby
Committee on Banking, Housing and Urban Affairs
June 26, 2012
“Thank you, Mr. Chairman.
“Today the Committee will continue its oversight of the available protections
for our servicemembers, veterans and their families in the consumer financial
marketplace. This Committee held a hearing last November to examine this
important issue. During that hearing, we heard about the unique financial
problems that confront servicemembers and their families.
“One problem is the disruption caused by overseas deployments and other
relocations. When Permanent Change of Station orders, or ‘PCS’ orders,
are issued, servicemembers are required to move even if they owe more on their
mortgage than their home is worth. Under such circumstances, service
members are faced with continuing to pay a mortgage for a house they no longer
live in or defaulting on their loan. At our last hearing, we were told
that this problem is compounded by the fact that a servicemember would not be
able to qualify for a loan modification or a short sale if the servicemember
was not yet delinquent.
“In response to this challenging problem, several agencies have recently taken
action. The Federal Housing Finance Agency (FHFA) has announced that it
will allow a servicemember who is given PCS orders and is current on a Fannie
Mae or Freddie Mac mortgage to qualify for a short sale. The FHFA policy
change will also allow Fannie and Freddie to waive any deficiency judgment
against the military borrower.
“In conjunction with this announcement, our nation’s banking regulators also
issued guidance on how mortgage servicers should treat military members who are
struggling under the weight of a PCS-related move and mortgage debt.
Today, I would like to hear from the Bureau of Consumer Financial Protection
about how this guidance will help our nation’s servicemembers who face these
difficult choices when they receive PCS orders.
“Last November, the Committee also heard about violations of the Servicemembers
Civil Relief Act by two of our nation’s largest banks. We heard that
these banks violated this law by foreclosing on members of the military while
they were on active duty. This is the sort of problem no military member
should have to worry about while fighting overseas.
“Presently, the Department of Justice is undertaking a review of several large
mortgage servicers to determine if any other violations of this Act have
occurred. Accordingly, I hope to learn whether additional violations have
been uncovered as part of this review and whether the affected servicemembers
have received the remedies to which they are entitled.
“Mr. Chairman, during the last hearing I stated that while often there appears
to be very little upon which our respective sides can agree, there is complete
agreement on our joint commitment to supporting our men and women in
uniform. This hearing is a demonstration of our continuing commitment.
“Thank you, Mr. Chairman.”