The House passed a bill late Monday to extend foreclosure relief for military service members through the end of next year.
The legislation, first introduced by Sen. Sheldon Whitehouse, D-R.I., has now cleared both chambers of Congress and was sent to President Obama for his signature.
The measure allows service members protection from foreclosure for one year after leaving active duty. That protection had expired in 2015, but the new bill extends the 12-month grace period through 2017. After that time, the foreclosure relief period will fall back to nine months.
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A new tool checks Department of Defense records to verify whether defaulted mortgage borrowers are actively serving in the military, providing a regulatory compliance check for servicers while staying within the confines of department policies.
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Bank of America Corp. will pay $20 million and Morgan Stanley $2.35 million for improperly foreclosing on members of the military — some of whom were on active duty in Iraq and Afghanistan — under a settlement with the Department of Justice.
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"This bill will help ensure that servicemembers are afforded vital protection and consideration during challenging financial times," said Dan Berger, the president and chief executive of the National Association of Federal Credit Unions.
During the foreclosure relief period, the sale, foreclosure or seizure of a service member's property is illegal without a court order or agreement from the service member. The legislation also allows courts to delay proceedings for properties that service members owned before their service.