WASHINGTON President Obama announced an initiative Tuesday with several large banks and mortgage servicers designed to make it easier for members of the military and their families to lower their mortgage payments.
The initiative, which includes participation by Wells Fargo, Citigroup, Bank of America, Ocwen Loan Servicing and Quicken Loans, is meant to help service members obtain interest rate reductions on their mortgages. While military personnel are already entitled to such breaks under the Servicemembers Civil Relief Act of 2003, "many do not exercise these important rights," the White House said.
"Under the law, our service members are entitled to reduced mortgage rates," President Obama said in a speech to members of the American Legion at their annual convention in Charlotte, N.C. "But the burden is on them to ask for it and prove they are eligible. Today we are turning that around."
The SCRA requires lenders to suspend or postpone mortgage payments and foreclosure proceedings while service members are stationed away from home and are facing financial difficulties. It also caps interest payments on mortgages and other loans at 6%.
Under the partnership, the five lenders and services have agreed to simplify the process and proactively notify service members who are eligible for low rates under SCRA. They have also pledged to review their servicing portfolios against the Department of Defense database to identify borrowers who are also active-duty members of the military.
"It's clearly the right thing to proactively reach out to active-duty military member and make sure they and their families are financially protected," said Bill Emerson, chief executive officer of Quicken Loans, in a press release.
The initiative won praise from financial industry trade groups, some of whom touted their own programs to help veterans and active-duty servicemembers. The Financial Services Roundtable and its Housing Policy Council urged institutions on Tuesday to join its effort to donate foreclosed houses to veterans and their families.
Over the past two years, Wells Fargo, Bank of America, JPMorgan Chase, Citi and U.S. Bank have donated 5,500 foreclosed houses to veterans, the group said.
These banks partner with nonprofits, refurbish and renovate the properties that are typically given to service members who are "struggling with injuries and other challenges that were sustained in battle," the Roundtable said.
"The total number of donated homes could double to nearly 11,000 over the next year if additional companies and government continue to join the effort," said John Dalton, the president of the Housing Policy Council.
During his speech, Obama noted progress in reducing the number of homeless veterans, which has fallen 33% since 2010 according to government agencies.
"We have been able to reduce the number of homeless veterans by one third," Obama told the Legionnaires. "That means on any given night there are 25,000 fewer veterans on the streets or in shelters."
However, there are still 50,000 homeless veterans in America, according to the latest estimate from the Department of Housing and Urban Development, Department of Veterans Affairs and U.S. Interagency Council on Homelessness.
"In just a few years, we have made incredible progress reducing homelessness among veterans, but we have more work to do," said HUD Secretary Julián Castro. "HUD will continue collaborating with our federal and local partners to ensure that all of the men and women who have served our country have a stable home and an opportunity to succeed."