More U.S. troops struggle to keep their homes
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As the home foreclosure crisis sweeps across America, military and financial aid groups say they are hearing from a rising number of troops who say they are falling behind on their mortgage payments and struggling to keep their homes.
"The Army as a whole has seen an increase in soldiers and families seeking assistance for mortgage foreclosures," says Army Lt. Col. Anne Edgecomb, an Army spokeswoman, citing data from branch legal offices trying to advise soldiers.
Neither the Pentagon nor the Department of Veterans Affairs track the number of military families facing foreclosure. Numbers of mortgage delinquencies are kept, however, by USAA, a San Antonio-based financial services company that serves military members and their families. The company declined to release figures, saying in a statement only that "we have seen an increase."
The nine VA regional loan centers have seen an increase in calls, now daily, from veterans and active-duty servicemembers with home-finance problems, according to an informal poll conducted by department officials in recent weeks, says spokesman Steve Westerfeld.
And calls from troops in mortgage crisis received by one non-profit credit counseling service - Houston-based Money Management International - doubled from two dozen per month the first quarter of 2007 to four dozen per month this past quarter, spokeswoman Catherine Williams says.
Troops have limited foreclosure protection under the Servicemembers Civil Relief Act. Lenders can seek a court order to foreclose on a house, even if the soldier is in combat, federal housing records show.
Edgecomb says Army legal officers are already preparing for an influx of calls about problem mortgages this summer. That's when soldiers typically change their assignments from one base to another and often have to sell their homes. There are also concerns that GIs who rent could be hurt indirectly by foreclosure of those properties, she says.
Pressures on family
Army Staff Sgt. Daniel Escamilla was on his third combat tour in Iraq last year when he had to negotiate from the battlefield with his lender over disputed penalties for the adjustable-rate loan on his four-bedroom home near Fort Carson, Colo. His payment had ballooned from $967 to more than $3,000.
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"Not only do I have to worry about staying alive, but now I got to worry about whether or not my family's going to get kicked out of the house," Escamilla says of the long-distance haggling last fall.
He finished his combat tour Dec. 31, but the mortgage fight only escalated, says Escamilla, who has three children. His lender, Colorado-based Aurora Loan Services, sent him a written threat of foreclosure a few weeks ago, he says.
After a USA TODAY inquiry last week to the parent company, New York-based Lehman Bros., a corporate officer notified Escamilla that all penalties would be removed and his payment adjusted down to its original amount, Escamilla says. "She was sorry for what happened," the soldier says.
Lehman spokesman Brian Finnegan says the company was "committed to working with customers to resolve issues."
Before the loan problem was resolved, however, the Escamillas were under serious financial and emotional stress. Angie Escamilla says her hair started falling out a month before her husband left for Iraq for the third time.
In addition to seeing him leave and being left to care for their children, she also faced losing their home because of escalating mortgage penalties and late fees, and the destruction of their credit, she says.
"With all of the stress I've been under, between this (mortgage crisis) and everything else, I've lost the majority of my hair," says the 29-year-old whose once-thick strands had turned to a fine, thin layer.
The foreclosure problem underscores what lawmakers say are major flaws in the VA's ability to help. Current law makes it difficult for servicemembers and veterans to refinance costly mortgages into VA-guaranteed loans, Westerfeld says.
"Anybody who's defending our nation should not be subject to this," says Rep. Bob Filner, a California Democrat who chairs the House Veterans Affairs Committee. He has sponsored legislation to address the problem. "Right now the VA home loan program is basically irrelevant to the crisis," Filner says.
The maximum VA-backed home loan available for refinancing under current law is $144,000, making it almost impossible to help servicemembers or veterans struggling to escape a costly, high-interest loan, Filner says.
"It's really hard. We'd like to be able to do so much more," says Judith Caden, director of loan guarantee services at the Department of Veterans Affairs.
New House legislation would raise refinancing loan amounts - and the amount for an original VA-guaranteed home loan, currently at $417,000 - to more than $700,000, Filner says. Other legislation would also prohibit lenders from foreclosing on active-duty servicemembers for at least a year.
Overall debt higher
The financial woes come at a time when military families are stressed by frequent and longer deployments for soldiers to Iraq and Afghanistan, commanders say. "The trend is definitely up in terms of members being squeezed, whether it's with home equity or mortgage or -- foreclosures," says Joseph "J.J." Montanaro, a financial planner with USAA.
The economic crunch extends beyond home mortgages, says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies, which provides financial counseling to many, including material families.
"We're seeing a lot more military families getting in trouble with auto loans now," Jones says. "That's become a very big thing, and I think a lot of that has to do with the downturn, obviously, in the overall economy and the increase in gasoline."
Financial advisers with Consolidated Credit Counseling Services have seen more servicemembers enrolling in debt management programs, with soldiers calling from as far as away as Guam, Turkey and Bahrain, according to spokesman Ken Scott. The average debt is about $9,000, he says.