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he New York Times, March 28, 2005 pA1 col 03 (47 col in)
Creditors Press Troops Despite Relief Act
(National Desk)
(BILLS IN THE KNAPSACK: A Law Gets Lost)
Diana B. Henriques.
Sgt. John J. Savage III, an Army reservist, was about to climb onto a
troop transport plane for a flight to Iraq from Fayetteville, N.C.,
when his wife called with alarming news: ''They're foreclosing on our
house.''
Sergeant Savage recalled, ''There was not a thing I could do; I had to
jump on the plane and boil for 22 hours.''
He had reason to be angry. A longstanding federal law strictly limits
the ability of his mortgage company and other lenders to foreclose
against active-duty service members.
But Sergeant Savage's experience was not unusual. Though statistics are
scarce, court records and interviews with military and civilian lawyers
suggest that Americans heading off to war are sometimes facing
distracting and demoralizing demands from financial companies trying to
collect on obligations that, by law, they cannot enforce.
Some cases involve nationally prominent companies like Wells Fargo and
Citigroup, though both say they are committed to strict compliance with
the law.
The problem, most military law specialists say, is that too many
lenders, debt collectors, landlords, lawyers and judges are unaware of
the federal statute or do not fully understand it.
The law, the Servicemembers Civil Relief Act, protects all active-duty
military families from foreclosures, evictions and other financial
consequences of military service. The Supreme Court has ruled that its
provisions must ''be liberally construed to protect those who have been
obliged to drop their own affairs to take up the burdens of the
nation.''
Yet the relief act has not seemed to work in recent cases like these:
At Fort Hood, Tex., a soldier's wife was sued by a creditor trying to
collect a debt owed by her and her husband, who was serving in Baghdad
at the time. A local judge ruled against her, saying she had defaulted,
even though specialists say the relief act forbids default judgments
against soldiers serving overseas and protects their spouses as well.
At Camp Pendleton, Calif., more than a dozen marines returned from Iraq
to find that their cars and other possessions had been improperly sold
to cover unpaid storage and towing fees. The law forbids such seizures
without a court order.
In northern Ohio, Wells Fargo served a young Army couple with
foreclosure papers despite the wife's repeated efforts to negotiate new
repayment terms with the bank. Wells Fargo said later that it had been
unaware of the couple's military status. The foreclosure was dropped
after a military lawyer intervened.
Little-Known Legislation
The relief act provides a broad spectrum of protections to service
members, their spouses and their dependents. The interest rate on debts
incurred before enlistment, for example, must be capped at 6 percent if
military duty has reduced a service member's family income.
The law also protects service members from repossession or foreclosure
without a court order. It allows them to terminate any real estate
lease when their military orders require them to do so. And it forbids
judges from holding service members in default on any legal matter
unless the court has first appointed a lawyer to protect their
interests.
The law is an updated version of the Soldiers' and Sailors' Civil
Relief Act, which was adopted on the eve of World War II and remained
largely unchanged through the Persian Gulf war of 1991. But in July
2001, a federal court ruled that service members could sue violators of
the relief act for damages. And the terrorist attacks on Sept. 11
prompted Congress to take up a long-deferred Pentagon proposal to
update the old act. The revised statute, clearer and more protective
than the old one, was signed into law in December 2003.
But the news was apparently slow in reaching those who would have to
interpret and enforce the law.
''There are 50,000 judges in this country and God knows how many
lawyers,'' said Alexander P. White, a county court judge in Chicago and
the chairman of one of the American Bar Association's military law
committees. ''Are people falling down on the job -- the judges, the
bar, the military? Probably.'' And broad understanding of the law ''is
not going to happen overnight.''
Military lawyers, credit industry organizations and some state courts
and bar associations have also tried to spread the word about the new
law. But these efforts are not enough, said Col. John S. Odom Jr.,
retired, of Shreveport, La., who is a specialist on the act. ''What we
need is a way to reach Joe Bagadoughnuts in Wherever, Louisiana,'' he
said. ''Because that's where these cases are turning up.''
One reason they are surfacing in unlikely places is the Pentagon's
increased reliance on Reserve and National Guard units that do not hail
from traditional military towns, said Lt. Col. Barry Bernstein, the
judge advocate general for the South Carolina National Guard. When
these units are called up, he said, their members find themselves
facing creditors and courts that may never have dealt with the relief
act.
As a result, some service members heading off to war have confronted
exactly the kinds of problems the law was supposed to prevent. The
Coast Guard alone handled more than 300 complaints last year; military
law specialists say the numbers are probably higher in the branches
sending troops abroad.
Financial Difficulties
Sergeant Savage's lender eventually dropped its foreclosure against him
after receiving repeated warnings from military lawyers at Fort Bragg,
N.C. But damage was done. The foreclosure dispute remained on his
credit history, hurting his ability to revive his struggling wireless
Internet connection business when he returned home to Asheboro, N.C.,
he said. By then he had retired on full disability after being
seriously injured while working on a sabotaged electrical system at the
former Baghdad Convention Center.
Sergeant Savage has not let the matter end. Represented by Colonel
Odom, he has filed a lawsuit in federal court in Greensboro, N.C. He
says the EverHome Mortgage Company, a unit of the EverBank Financial
Corporation in Jacksonville, Fla., violated the relief act by failing
to cap his mortgage at 6 percent, wrongfully initiating foreclosure
and, after dropping the foreclosure, failing to remove information
about it from his credit history.
The mortgage company denied that it violated the act or treated
Sergeant Savage unfairly. His case ''has unique and extenuating
circumstances'' that will be raised when the dispute comes to trial,
Michael C. Koster, EverHome's president, said in a written statement.
''We are confident that court documents will reveal that EverBank
treated Mr. Savage equitably and worked diligently to resolve this
matter,'' Mr. Koster said.
Extent of Coverage
When Sgt. Michael Gaskins of Fort Hood, Tex., was sent to Iraq last
April, his wife, Melissa, was left to cope with a dispute over a
delinquent loan from the Tallahassee Memorial Hospital credit union;
the couple took out the loan just before Sergeant Gaskins enlisted in
November 2001. When the credit union took the couple to court in Texas
last year, a military lawyer at Fort Hood alerted the local judge that
the new relief act
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