Military Relief Options for Service Members
Freddie Mac recognizes the commitment and increasing sacrifice our military service members and their families make every day. We encourage Servicers to offer service members Freddie Mac military relief options, including leveraging The Servicemembers Civil Relief Act (SCRA). The SCRA and state military relief laws provide service members with various forms of relief from debt obligations, including mortgage obligations during a period of military service. The information on this page serves as a resource for Servicers to effectively implement military relief legal protections for borrowers with Freddie Mac-owned mortgages.
For information about the SCRA and how it applies to mortgages, please visit the Department of Justice website.
Eligibility for SCRA Protection
Determine Eligibility for SCRA Protection
A mortgage is generally eligible for protection under the SCRA if both of the following factors are met:
- The service member is the borrower (or co-borrower) or has assumed liability for the mortgage.
- The mortgage obligation was incurred prior to beginning the current period of military service.
Mortgage Relief Available Under the SCRA
Interest Rate Cap: The SCRA caps interest at 6% per year (including all charges and fees) on a service member's mortgage obligations during the period of military service and for one year after.
Foreclosure Relief: The SCRA currently prohibits the sale, foreclosure, or seizure of property secured by an eligible mortgage during the service member’s period of military service and for 12 months after the period of military service ends.
To streamline the process for Servicers to implement the financial protections and benefits offered by the SCRA, and to lower barriers for service members to meet documentation requirements to establish eligibility, when provisions of the SCRA require a service member to provide a copy of their military orders, Servicers may accept:
- Official military orders which reflect the start date of the Period of Military Service
- A certification, including a certificate obtained from the Defense Manpower Data Center, which delineates the start date of a service member’s Period of Military Service
- A letter on official letterhead from the military unit to which the service member is assigned, is signed by the service member’s commanding officer and contains the following: a statement that the letter is intended to be relied upon by creditors for SCRA purposes, the service member’s full name and Social Security Number, home address, start and end dates of the Period of Military Service and commander’s contact telephone number, or
- Any document the Department of Defense deems a substitute for official orders.
To determine whether a borrower is a service member on active duty, please visit the Department of Defense website to verify military status.
When evaluating a service member for a refinance mortgage, Servicers should remind them to consult with their legal advisor prior to refinancing their existing mortgage to determine potential impacts to protections under SCRA or state military relief laws. discharged in a Chapter 7 bankruptcy.
State Military Relief Laws
A majority of states have passed laws which provide benefits to members of the military similar to those provided by the SCRA. Each state law is unique and must be examined to ensure compliance. In many cases, the laws align with the SCRA, but apply to a larger group of individuals, such as members of the National Guard ordered to state, but not federal, active duty. In other cases, these laws provide additional protections such as limiting reporting to credit bureaus.
Mortgage Relief for Ineligible Service Members
Mortgage Relief for Service Members Ineligible for SCRA Protection
If a service member or dependent experiences an eligible hardship and does not qualify for protection under the provisions of the SCRA or state military relief laws, or qualifies but chooses to explore other options, the Servicer must evaluate the borrower for the most appropriate relief or workout option in accordance with the evaluation hierarchy outlined in Freddie Mac Single-Family Seller/Servicer Guide (Guide) Chapter 9102.
If a borrower requires additional relief than what is currently available, please contact your Freddie Mac representative. Together, we can work to develop relief solutions that assist service members and their dependents keep their homes.
Foreclosure Relief Extended to Service Members and their Dependents
Freddie Mac extends foreclosure relief to service members during their period of military service and for one year after the date military service ends if the borrower:
- Is a service member, regardless of when the mortgage was originated, and the mortgaged premises serves as his or her primary residence.
- Is a dependent of a service member and the mortgaged premises is the primary residence of the service member or a dependent of a service member.
- Was a service member who died during his or her period of military service and the mortgaged premises continues to serve as the primary residence of a dependent of the service member.
- Please Note: To receive foreclosure relief the property must be a primary residence which excludes tenancies. Therefore, Freddie Mac’s foreclosure relief does not apply to a borrower that is just renting the mortgaged premises to a service member or a dependent.
- Servicers should verify status as a service member or a dependent as they usually would when assessing them for SCRA protections.
- Servicers can verify a borrower’s status as a dependent of a service member via:
- Their DD Form 1173, United States Uniformed Services Identification and Privilege Card;
- A print out of their Defense Enrollment Eligibility Reporting System (DEERS) enrollment form; or
- A review of the service member’s most recent tax return which should reflect their dependents.
- Servicers should incorporate questions about service member and dependent status into their default management communications so that eligible borrowers can request relief. If a borrower doesn’t request relief and the servicer otherwise can’t identify the borrower as eligible, then the Servicer may not be able to offer foreclosure relief.
- Under no circumstances should a Servicer bring mortgages of service members into foreclosure during their period of military service. If the Servicer believes there are unusual circumstances that warrant foreclosure, such as the mortgaged premises being vacant or abandoned, the Servicer must contact Freddie Mac to obtain prior written approval to initiate or complete foreclosure proceedings.
Servicer EDR Reporting
Servicer EDR Reporting to Freddie Mac
Servicers must notify Freddie Mac via an Electronic Default Reporting (EDR) transmission within the first three business days of the month following the month that mortgage relief is provided to a service member. The following EDR codes must be included to accurately update the loan status:
Default Action Code 32 – When Default Processes are Delayed
Servicers should only use default action code 32 to report default processes that are delayed due to the borrower:
Being in a period of military service and covered under the SCRA, or
Receiving foreclosure relief provided to service members and their Dependents in accordance with Guide Section 8503.2.
Servicers must provide the date default process were suspended and continue to report each month that the service member receives foreclosure protection under the SCRA or Guide Section 8503.2.
- Default Action Code 14 – All Other Mortgage Relief or Workout Options Offered to Service members
When reporting mortgage relief, loan modifications, or liquidation options provided to service members, Servicers must report the default action code associated with the specific relief, modification, or liquidation option. Servicers must also report the default reason code 14 to indicate the hardship was caused by military service.
For additional information about EDR, refer to Guide Section 9102.7.
SCRA Best Practices
To maximize the number of eligible borrowers who take advantage of the SCRA interest rate cap we encourage, but do not require, Servicers to take proactive steps to identify borrowers who are eligible for SCRA benefits but are not taking advantage of them.
Servicers may consider adopting the following:
- Query the Freddie Mac loans they service with note rates greater than 6% against the Defense Manpower Data Center(DMDC) website on a quarterly basis.
- Identify those borrowers currently serving or projected to serve a Period of Military Service and determine if their Mortgage obligation qualifies for SCRA protection.
- Proactively solicit those borrowers who are currently serving or projected to serve a Period of Military Service and whose Mortgage qualifies for SCRA protection to inform them of their benefits under the SCRA and how they make take advantage of them.
For service members already receiving the SCRA Interest Rate Subsidy, while the interest rate cap is in effect, the Servicer should query the DMDC website on a quarterly basis to verify the service member is still in a Period of Military Service or that no changes been made to the duration/term of the Period of Military Service that may affect the service member’s eligibility to receive relief.