A complicated, but sometimes overlooked, issue facing foreclosing lenders is properly handling and defending against claims that a servicemember-owner is entitled to protections from foreclosure based on his or her status as a servicemember. The “Servicemembers Civil Relief Act (2003),” 50 App. U.S.C. §§ 501-515, 516-597b, (the “SCRA” or the “Act”), provides protections to Servicemembers in various legal contexts, including foreclosure actions. The Act’s stated purposes are “to provide for, strengthen, and expedite the national defense through protection . . . to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation” and “to provide for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service.” 50 App. U.S.C. § 502. With such an overarching “patriotic”-sounding purpose, many lenders are understandable hesitant to foreclose upon any person serving in the armed forces for fear of bad press and public backlash. However, there are many things to consider and do when developing strategy and tactics when a lender seeks to foreclose upon a property owned by a member of the armed forces.

WHO IS A “SERVICEMEMBER” UNDER THE SCRA?

I. Generally

A “Servicemember” includes the following:

1. Members of the Army, Navy, Air Force, Marine Corps and Coast Guard on active duty under 10 U.S.C. § 101(d)(1) (italics added);

2. Members of the National Guard who are called to active duty as authorized by the President or the Secretary of Defense for over 30 consecutive days under 32 U.S.C. § 502(f) to respond to a national emergency declared by the President and supported by federal funds; and

3. Commissioned members of the Public Health Service and the National Oceanographic and Atmospheric Administration while on “active service”.