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.
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 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.
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.
- Department of Defense website
- Department of Justice website
- Guide Bulletin 2013-15
- Guide Chapter 82
- Guide forms required when selling or servicing a mortgage for a service member
- Form 1071, Supplemental Accounting Report of SCRA Mortgages
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 64.
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 continues to extend protections to all service members during their period of military service, as follows:
Servicers must not initiate or, if already initiated, must not complete foreclosure of a mortgage where a service member is the borrower and the mortgaged premises is the primary residence of the service member. This is applicable regardless of when the mortgage was originated, during the period of military service of the service member, for one year after the date military service ended or for one year after the service member died during the period of military service.
Additionally, Servicers must not initiate or, if already initiated, must not complete foreclosure of a mortgage where the service member was not the borrower, but the mortgaged premises is the primary residence of a dependent of a service member during the period of military service of the service member. This applies for one year after the date military service ended or for one year after the service member died during the period of military service. For example, if the borrower is the spouse and a dependent of a service member who left military service on January 1, Servicers should not initiate or complete foreclosure until after January 1 of the following year.
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. For example, a dependent of the servicer member should be shown on the service member’s income tax return.
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 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. When utilizing default action code 32, Servicers must provide the date SCRA provisions were implemented and continue to report each month that the service member is receiving SCRA protection.
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 64.10.