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Lawmakers consider credit protection for troops

A House subcommittee is weighing whether to expand the financial protections of the Servicemembers’ Civil Relief Act.

One proposal, from Rep. Albert Wynn, D-Md., would provide one year of post-service protection against foreclosure on a home. A second proposal, by Rep. Steve Israel, D-N.Y., would require the federal government to notify credit reporting agencies when a service member is deployed so agencies can note in their files why payments might be late.

The two lawmakers were among a larger group of people testifying before the House Veterans’ Affairs economic opportunity subcommittee, which plans to pass a package of legislation later this year.

Wynn proposes to extend foreclosure protection, which now applies to Guard and reserve members while they are mobilized and for 90 days after demobilization to prevent foreclosure, for up to one year after separation from active duty for both active and reserve component members. It would apply to honorably separated service members and their immediate families.

His bill, HR 1750, “gives service members, Guard and reserve members returning from active duty time to readjust to civilian life, while protecting their most valuable and necessary asset for rebuilding a normal life with their family,” Wynn said.

“Many combat injuries incurred as a result of active-duty service, both physical and mental, can seriously obstruct servicemen and servicewomen from finding and holding down a job,” Wynn said.

Wynn said despite financial protections in law, many service members and their families suffer financially during and immediately after deployments.

“Many service members and their families incur significant debt that is difficult to pay off,” he said. “Combined with common problems in readjusting to civilian life, and mental and physical challenges that many veterans face, these economic challenges can lead to late or missed mortgage payments” and possibly foreclosure.

Wynn stressed that his bill does not provide absolute protection, leaving it to a court to decide if a service member’s ability to pay a loan has been hurt by military service. Wynn said foreclosure is still possible, especially for those who are “irresponsible.”

But a court hearing could not be held until one year after active service ends.

Israel, the sponsor of HR 1598, the consumer credit reporting bill, said he wants to ease the burden on deployed troops and their families.

Like Wynn, Israel stressed that his bill would not prevent someone from having to pay what they owe.

“It simply ensures that every man and woman who is fighting for us overseas does not have to worry about their financial rights being violated back home,” he said.

Israel said some of the financial protections in current law, such as reduced interest rates on personal loans, are not well-known, and deploying service members have better things to think about than how to demand those protections.

“Among the rushed preparations and farewells, these reservists might not have the time to report to credit bureaus on their change to active status in a combat zone,” he said. “Shouldn’t the government, which is deploying the soldier, make this transition easier for them and protect them?”

The economic opportunity subcommittee also is considering a bill by Rep. Robert Brady, D-Pa., that would have the government contact credit reporting agencies on behalf of deployed service members.