Well, it’s about time.
Yesterday, Freddie Mac announced that Permanent Change of Station (PCS)
orders would be considered a hardship for military families with homes
underwater and needing to do a short sale.
Prior to this announcement, active military transfers were
treated the same as any other short sale – and often, because the “hardship”
didn’t include health or financial issues, the lenders would take them even
less seriously.
While frustrating, it became mind-blowing when servicers
handling VA loans exhibited the same behavior. How can you service military loans – guaranteed by the U.S.
Department of Veterans Affairs – and not understand the seriousness of a PCS
order?
Just last week, Bloomberg News interviewed me about the very
idea of PCS orders and how little lenders cared about them. This has been a serious problem for
years and it shouldn’t have taken this long to be addressed.
Finally, we might start seeing lenders treat their military
customers with at least a little of the care and concern they shamelessly
purport to do in their many military-themed commercials.
The stress on the average military family is significant –
from having a loved one in harms way, to the constant moving and lack of
relative stability. Rarely is a
PCS order an option, yet many lenders have treated them as if they were.
As the press release notes:
“… once implemented the new
policy will enable borrowers with PCS orders to sell a primary residence
purchased on or before June 30, 2012 for less than the balance on their
mortgages without first being in default.
Freddie Mac will also not pursue deficiency judgments or a contribution
under the new policy.”
Hopefully, more lenders and servicers will follow suit. As I’ve mentioned in past blogs about
this topic, the overwhelming majority of active military seeking loss
mitigation assistance are casualties of the housing crisis, not causes of
it. They purchased homes in hopes
of providing a level of normalcy for their families, who accompany them from
base to base. They hardly did so
for profit – not that there would’ve been anything wrong with that.
Further, the lenders who approved these loans were well
aware of the applicants vocation and – especially in the case of VA loans –
were aware that transfers weren’t only a possibility, but likely.
No one deserves the financial ruin of a foreclosure, simply
because they were transferred while serving their country.
You can read the full press release at Freddie Mac’swebsite.
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