Lending a Helping Hand to Veterans and Their Families
At the recent MBA National Mortgage Servicing Conference, I had the opportunity to listen to a panel discussion focused on assisting military families with mortgage difficulties. I actively volunteer time to support deployed members of the U.S. armed forces, so it was gratifying to see the industry discuss ways we can make home ownership and financing work better for active duty service members and veterans.
The number of veterans entering civilian life is increasing, especially with military efforts in Afghanistan winding down. A number of these veterans either own or will want to purchase homes. However, military personnel often face greater challenges financing their homes than civilians.
Many purchased homes before deployment - and before the housing crash - leaving them with upside-down mortgages. In addition, military personnel are receiving lower housing stipends, and moving costs have increased, which squeezes already tight budgets. Many had to purchase second houses due to military relocations, but were unable to sell their first homes, causing additional financial hardship. Others may have credit issues.
What's even more challenging is that a number of these men and women are recovering from combat wounds, post-traumatic stress and other combat-related emotional injuries. For the permanently disabled vet, it may take as long as three years to be certified as disabled by the Veterans Administration, which means that until paperwork is complete, a mortgage may be on perpetual hold.
The Service Members Civil Relief Act (SCRA) provides some protections intended to alleviate financial stress for active duty service members. Government agencies and many nonprofits also have stepped in with various programs to help veterans who are returning to civilian life. And while the financial services community is required to do certain things to comply with current regulations, it's heartening to see many institutions and lenders taking even more steps to help our military families.
I have seen financial institutions going the extra mile to truly understand the financial hardships faced by military families and stepping up to the plate when dealing with these issues, such as taking into account the military pay system when making credit decisions and loan modifications. While the SCRA requires a six percent cap on interest rates, some financial institutions are going beyond the letter of the law to offer lower rates to servicemembers who might not automatically qualify for those rates.
Single point of contact – or SPOC – was a hot topic at the MBA event, and I know of some financial institutions that are taking that effort to the next level by offering service members and veterans one contact within the institution who will help with all of their financial needs – from a mortgage to a savings account to investment advice.
There are nonprofit groups, like HOPE NOW and CredAbility, that offer advice and support to military personnel and veterans organizations. These organizations, together with the Veterans Administration and other agencies, are excellent partners for financial institutions looking to better understand and support these special circumstances.
By collaborating, we can help our military personnel get back to a normal civilian life in a seamless, coordinated way. Not only is it the right thing to do, but it is also smart business. Vets who are returning home or leaving the service are facing one of the most challenging times of their lives. A financial institution that understands their unique situation and makes the commitment to support them will win loyal customers for life.