GAO REPORT | MORTGAGE FORECLOSURES – Regulatory Oversight of Compliance with Servicemembers Civil Relief Act Sucks

MORTGAGE FORECLOSURES – Regulatory Oversight of Compliance with Servicemembers Civil Relief Act Has Been Limited

What GAO Found

Certain protections under the Servicemembers Civil Relief Act (SCRA) only apply to those servicemembers who obtained mortgages prior to becoming active duty, but at least 15,000 instances of financial institutions failing to properly reduce servicemembers’ mortgage interest rates and over 300 improper foreclosures have been identified by federal investigations and financial institutions in recent years. Additional independent reviews of financial institutions’ compliance are under way, and staff from some of these institutions told GAO that they have implemented improved practices—such as creating single points of contact familiar with military issues for borrowers—to better comply with SCRA.

Federal regulators’ oversight of SCRA compliance has been limited. GAO estimates that from 2007 through 2011 prudential depository institution regulators—the Federal Deposit Insurance Corporation, Federal Reserve Board, National Credit Union Administration, and Office of the Comptroller of the Currency—reviewed 48 percent of all banks and credit unions for SCRA compliance. Of these institutions that were reviewed for SCRA compliance, only about half received examinations that involved testing of compliance by reviewing loan files. Further, GAO found that examiners had only reviewed loans identified by the institution as involving servicemembers and had not independently selected a statistical sample of loan files, which would have provided greater assurance of SCRA compliance. Without more testing, which examination and auditing guidance suggest provides increased verification, regulators are less likely to detect SCRA violations. Various other federal agencies are involved in SCRA compliance oversight. The Department of Justice has explicit SCRA enforcement authority and since 2007 has brought three cases against mortgage servicers for violations. The Department of Veterans Affairs (VA), Federal Housing Administration, and Federal Housing Finance Agency—which regulates the government-sponsored enterprises—all obtain information about SCRA compliance at the servicers that participate in the mortgage programs they administer or regulate, but the agencies and the prudential regulators do not share such information among themselves. Collaboration among these agencies could lead to more effective supervision and improve their awareness of potential problems with SCRA compliance. Further, VA oversight of mortgage servicers does not specifically review for SCRA compliance. By increasing its SCRA compliance monitoring efforts, VA could better ensure that servicemembers with VA loans are better protected.

SCRA requires that the Department of Defense (DOD) and Department of Homeland Security (DHS)—which oversees the Coast Guard—inform servicemembers of their SCRA rights. The military services provide this information in various forms, such as briefings and websites. However, some military officials said that servicemembers—particularly members of the National Guard and reserve—often receive SCRA information as part of briefings with numerous other topics prior to deployment and do not always retain the necessary awareness when they need it later. DOD and DHS do not assess the effectiveness of their SCRA education methods, such as by using focus groups of servicemembers or testing to reinforce retention of SCRA information. Without such assessment, they may not be able to ensure that they are informing servicemembers of their rights in the most effective manner.

Why GAO Did This Study

SCRA protects servicemembers whose active duty military service prevents them from meeting financial obligations, by allowing interest rates on certain debts to be reduced and requiring a court order before certain foreclosures on their homes can occur. With foreclosures rising, reports surfaced of instances in which financial institutions failed to comply with SCRA. GAO examined the (1) eligibility for SCRA protections and extent of SCRA mortgage-related violations by depository institutions, (2) SCRA compliance oversight by prudential regulators and other federal agencies, and (3) the military services’ efforts to educate servicemembers on SCRA. GAO collected data on populations eligible for SCRA from DOD and SCRA violations from banking and law enforcement agencies and reviewed a stratified random sample of prudential regulators’ examinations of banks and credit unions. GAO also interviewed regulators, law enforcement and military officials, and military service organizations.

What GAO Recommends

Prudential regulators should conduct more extensive loan file testing for SCRA compliance. Regulators and other agencies that oversee mortgage activities should also explore opportunities for information sharing on SCRA compliance oversight, and VA should expand its SCRA compliance monitoring efforts. Finally, DOD and DHS should assess the effectiveness of their efforts to provide SCRA information to servicemembers. The agencies generally agreed and noted actions responsive to GAO’s recommendations.

Full report below…



MORTGAGE FORECLOSURES – Regulatory Oversight of Compliance with Servicemembers Civil Relief Act Has Been Limited

4 Responses to “GAO REPORT | MORTGAGE FORECLOSURES – Regulatory Oversight of Compliance with Servicemembers Civil Relief Act Sucks”
  1. Fed up says:

    Get ready for the rise of the American. Either by the ballot or the bullet we will take our country back. from the criminally insane. Load up… buy guns and lots and lots of bullets.

  2. Charles Reed says:

    Fellow veterans and active service members, I am coming to show our government what they are doing to us is a crime. What has occurred and why we are not getting modification in because our loans were placed into Ginnie Mae pools and as they hold what is called a Blank Notes, by law they are not a lender so they cannot change a interest rate or term, but most important is they are not the owner of our debt/loan because they did not purchase the loans.

    I have written VA OIG who does not have the mental ability to handle the truth of whats going on, and are stupidly allowing the VA Guaranty Fund to pay out False Claims against our properties that the banks/servicers don’t actual own, but are receiving the false claims and with just the 15,000 on the average size loan amounts to $150 million in fraudulent claims and over $1.5 billion in stolen homes from US Military I support the Troop bs.

    President Obama has signed a executive order preventing the law from being carried out in deporting children of illegal immigrants who I am not saying I want there children thrown out the country, but it ain’t fair that our American child are deported from there home by President Obama and his Ginnie Mae federally wholly owned company.

    Now I have written every body another this securities violation we as the Troops find ourselves in. We did not steer blacks and Hispanics into crack mortgages who’s rates were attached to the LIBOR that was rigged.

    Good news is that what going on is going to be easy to show if you started off with or loan was purchase by Washington Mutual Bank, IndyMac or Countrywide. Ginnie Mae got a problem and Secretary Donovan who I have been writing daily about this situation knows I know what the fraudulent deal is.

    This problem like that of Wells Fargo Bank racial discrimination against minorities is that they did not have any black or veterans working in the prime and government mortgage loan officer positions to protect minorities or the Troops!

  3. 1ofthemany says:

    Service men and women have been duped for years, from testing on then unknowingly to ripping them off when they come back with body parts missing or their minds begin truly crapped on and reprogrammed again unknowingly,. take the VA (although there are a few good ones, only because of the doctors that work there) and oh no do not tell them they are privy to a pension no lets not do that or make them aware of Any right they have because they $erved this once great county now we kill for the oil and what ever the flavor is of the day for the ones that make all of this evilness perpetuate…Again one the biggest rip off in history, the unable leaders do not deserve the sweat from the service people’s brow… Ever.. You service people will have to fight and dig out the info for yourself and then go through all the red tape and all the waiting but it is up to our service men and women to make it happen not some silly little system put into place by our (un) beloved gov officials. Very sad indeed. these people are treated this way

  4. Tee says:

    Who is dropping the ball? Obama?? Is he just bullshit smoking mirrors? all of his programs just die? there is no accountability …..Is it him or congress? wtf is going on? no truth in anything, lies, hiding the guilty, bullshit while the banks do the same thing they always do………..and Romney….???? what a dik……time to batten the hatches….were screwed.

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