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Consumer Watch: Feds: More mortgage help available for troops, but banks slow to help

Mar. 21, 2012 - 06:33PM   |   Last Updated: Mar. 21, 2012 - 06:33PM  |  
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HOW TO GET HELP

None of the following banks is able to provide clear direction yet on what troops should ask for when inquiring about this specific assistance. I suggest asking for "military mortgage assistance related to permanent change-of-station moves as outlined in the Justice Department and state attorneys general settlement."
• Ally
Ally (GMAC Mortgage) will contact borrowers who may qualify, but military borrowers with questions can contact GMAC. "Borrowers are encouraged to complete and submit a financial package so the company can assess their individual situation," said spokeswoman Susan Fitzpatrick.
Contact: militaryfamilies@gmacm.com; military line at 866-961-1412.
If expecting PCS orders soon:
Those expecting a change in circumstances can contact GMAC ahead of time.
• Bank of America
Bank of America officials could provide no information.
Contact: Military assistance unit at 877-430-5434.
• Chase
Chase is still working out details, according to officials.
Contact: Mortgage settlement hotline at 866-372-6901 from 8 a.m. to midnight Eastern, Monday-Thursday; 8 a.m. to 11 p.m. Friday; and 8 a.m.-5 p.m. Saturday. Or visit a Chase branch or Chase Homeownership Center.
If expecting PCS orders soon: Call Chase Military Services at 877-469-0110.
• Citi
Citi officials could provide no information.
Contact: 866-272-4749.
• Wells Fargo
This specific provision applies only to Wells mortgages that were taken out before a service member entered active duty, said Jerald Banwart, senior vice president of customer operations.
Contact: Military customer service center, 866-936-7272.

Now that the Justice Department has forged agreements with five large banks to help troops caught in the bad housing market, service members want more information — but as of yet, they're not getting any.

One provision of the recent agreements are meant to help certain troops forced to move on military orders who can't afford to sell their homes because they owe more on the mortgage than the homes are worth.

The agreements were worked out in addition to a $25 billion government settlement with these banks over nationwide mortgage fraud.

Some troops tell me they have called their banks and the Justice Department and are having trouble getting answers. Frankly, I'm having trouble getting answers, too. That's in large part because these agreements are new.

Yet, Justice officials have publicly touted these agreements as being able to help service members — and the moving season is quickly approaching. The Justice Department says the banks — Ally, Bank of America, Chase, Citi and Wells Fargo — will be required to give certain troops the option of a short-sale agreement and a deficiency waiver.

A deficiency waiver means banks will not later attempt to collect the difference between the amount owed on the mortgage and the house's sale price, as long as the deficiency is less than $250,000.

Justice officials say this part of the settlement is designed to help some homeowners who did not qualify for the Defense Department's expanded Homeowners Assistance Program because they bought their homes after July 1, 2006, or missed qualifying for the program because of other reasons, such as receiving PCS orders after Sept. 30, 2010.

Causing confusion

Some of the information we received from banks is contradictory. Wells Fargo's interpretation of the agreement would mean that few, if any, service members would qualify for help, contending that expanded benefits related to the PCS orders apply only to those who bought their homes before they entered active duty. Jerald Banwart, senior vice president of customer operations, said this provision is tied to the Servicemembers' Civil Relief Act.

The agreement does refer to service members who qualify for SCRA benefits. Wells Fargo is narrowly interpreting that to apply to a specific SCRA benefit, rather than the broader definition.

Justice Department officials had no clarifying information at press time. However, their fact sheet clearly ties this part of the settlement to the Homeowners Assistance Program, which had no such requirement. Rather than taxpayers picking up the tab as was the case under HAP, the banks will pay, Justice officials have said.

At press time, none of the other banks had stated that their interpretation was the same as Wells Fargo's.

Generally, to be eligible:

• The mortgage must be owned by one of these five banks.

• Troops must be on full-time active duty.

• The property must be a principal residence, or must have been so at least until the family moved on PCS orders.

• The property must have been purchased between July 1, 2006, and Dec. 31, 2008.

• PCS orders must have been received on or after Oct. 1, 2010, and must require relocation outside a 50-mile radius.

• The short sale must take place within 12 months of relocation.

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