On Monday, the CFPB and DOJ announced that they sent joint letters to landlords/property management companies and mortgage servicers regarding the protections given to servicemembers by the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Servicemembers Civil Relief Act (SCRA).
Letter to landlords/property management companies. The letter only addresses SCRA protections for early lease terminations and evictions. The SCRA allows servicemembers to terminate a lease early after entering military service or receiving qualifying military orders. The letter reviews the specific elements of this protection and identifies several aspects that are “sometimes misunderstood.” These aspects include:
- The DOJ’s position that requiring servicemembers to repay rent concessions or discounts is an early termination fee that violates the SCRA.
- Because the SCRA does not contain any requirement regarding minimum mileage between the leased property and the servicemember’s new duty station, any mileage requirements in a lease “are likely unenforceable.”
- The DOJ’s position that waivers of SCRA rights are invalid if they are addenda to a lease and not separate instruments, are signed at the same time as the lease, and are not supported by an additional benefit to the servicemember.
With regard to eviction protections, the letter includes reminders that the SCRA (1) prohibits a landlord from evicting a servicemember or a servicemember’s dependents from a residential home during a period of military service without first obtaining a court order, and (2) requires a landlord or property manager to file an affidavit notifying the court of the tenant’s military status when seeking a court order through a default judgment.
Letter to mortgage servicers. The letter states that it comes in response to complaints from servicemembers and veterans on a range of potential CARES Act violations, including inaccurate credit reporting of mortgages in forbearance, inaccurate or confusing communications to borrowers about hardship forbearances, and required lump sum payments for reinstating mortgage loans. The letter indicates that the CFPB “is currently reviewing these complaints to determine if further investigation is warranted.”
The letter reviews the generally applicable CARES Act mortgage protections regarding the right to a forbearance, credit reporting, loss mitigation, and early intervention obligations of servicers. It also reviews the SCRA foreclosure protections for servicemembers and notes the obligation of servicers to comply with the SCRA regardless of whether their state provides for judicial or non-judicial foreclosures. The letter discusses the SCRA provisions that require a court order prior to foreclosing on a mortgage, an affidavit to be filed to obtain a default judgment, and an attorney to be appointed to represent the interests of a defendant servicemember before a court enters a judgment.
In addition to taking steps to ensure compliance with federal law, landlords/property management companies and mortgage servicers should also check with counsel regarding state law protections for servicemembers that can be greater than the protections afforded under federal law.