SCRA provides the following mortgage-related protections to  servicemembers:  Interest rate cap. Some servicemembers also appeared to have benefitted from  the SCRA interest rate cap. Financial institutions we contacted could not  provide sufficient data to assess the impact of different protection periods,  but our analysis indicates that mortgage delinquencies appeared to  increase in the first year after active duty. Actual Number of Servicemembers Eligible for SCRA Mortgage Protections Unknown

Based on our interviews and the data sources we reviewed, the number  of servicemembers with mortgages eligible for SCRA protections is not  known because servicers have not systematically collected this  information, although limited data are available. According to these data, a small percentage of the financial  institutions’ total loan portfolios were identified as being eligible for SCRA  protections. At two servicers, we found that SCRA-protected borrowers  had delinquency rates from 16 to 20 percent. In contrast, non-SCRA- protected military borrowers had delinquency rates that ranged from 4 to  8 percent. According to data provided by this institution—which  included the initial interest rate and a current interest rate for 9  consecutive months in 2013—some SCRA-eligible borrowers saw their  interest rates reduced to 6 percent or less, but almost 82 percent of the  loans for those eligible for such a reduction retained rates above 6  percent. Because most of the institutions we interviewed reported that they  made enhancements to their data systems in 2012 to better identify  SCRA-eligible borrowers, they were unable to provide data for both  SCRA-eligible borrowers and a comparison group of other military  borrowers before the end of 2011, when the protection periods were  shorter. Analyzable data from one institution  on the mortgage status of all its military borrowers for a 9-month period in  2013, including those who had left active duty service within the last year,  indicated that SCRA-protected borrowers who were within the 1-year  protection period after leaving active duty service had a higher chance of  curing their delinquencies than did the institution’s other military  borrowers who had left active duty service. DOD and Various Partners Provide Financial Education, but Limited Information on Effectiveness of Efforts Exists

DOD has entered into partnerships with many federal agencies and  nonprofit organizations to help provide financial education to  servicemembers, but limited information on the effectiveness of these  efforts exists. In addition, DOD officials noted that some partners provide SCRA  outreach and support to servicemembers. For example, the Bureau of  Consumer Financial Protection has an Office of Servicemember Affairs  that provides SCRA outreach to servicemembers and mortgage servicers  responsible for complying with the act. But they also told us that obtaining additional information about  the educational resources available through the partnerships and their  performance would be helpful. Without an assessment of the effectiveness of its educational  methods (for example, by using focus groups of servicemembers or  results of testing to reinforce retention of SCRA information), we noted  that DOD might not be able to ensure it reached servicemembers in the  most effective manner. We recommended that DOD assess the  effectiveness of its efforts to educate servicemembers on SCRA and  determine better ways for making servicemembers aware of their SCRA  rights and benefits, including improving the ways in which reservists  obtain such information. In response to our recommendation, as of December 2013, DOD was  reviewing the results of its recent surveys on the overall financial well- being of military families. Our findings for this report—that many  servicemembers appeared not to have taken advantage of their ability to  reduce their mortgage interest rates as entitled—appear to reaffirm that  DOD’s SCRA education efforts could be improved and that an  assessment of the effectiveness of these efforts is still warranted. Appendix I: Objectives, Scope, and Methodology

This report examines (1) available information on changes in the financial  well-being of servicemembers who received foreclosure-prevention and  mortgage-related interest rate protections under SCRA, including the  extent to which servicemembers became delinquent on their mortgages  after leaving active duty and the impact of protection periods; and (2) the  Department of Defense’s (DOD) partnerships with public- and private- sector entities to provide financial education and counseling about SCRA  mortgage protections to servicemembers and views on the effectiveness  of these partnerships. We obtained and analyzed loan- level data, institution-specific summary data, or both, from four financial  institutions (three large single-family mortgage servicers and a large  credit union). Information on DOD Partnerships

To examine the effectiveness of DOD’s partnerships, we analyzed  documentation on DOD’s partnerships with public and private entities that  provide financial education and counseling to servicemembers. We reviewed the nature of such partnerships,  including information or efforts related to SCRA mortgage protections.
Why GAO Did This Study

SCRA seeks to protect eligible active duty military personnel in the event that their military service prevents them from meeting financial obligations. Mortgage-related protections include prohibiting mortgage servicers from foreclosing on servicemembers' homes without court orders and capping fees and interest rates at 6 percent. Traditionally, servicemembers received 90 days of protection beyond their active duty service, but this period was extended to 9 months in 2008 and to 1 year in 2012. The legislation that provided the 1-year protection period also mandated that GAO report on these protections.
This report examines (1) available information on changes in the financial well-being of servicemembers who received foreclosure-prevention and mortgage-related interest rate protections under SCRA, including the extent to which they became delinquent and the impact of protection periods; and (2) DOD's partnerships with public- and private-sector entities to provide financial education and counseling about SCRA mortgage protections to servicemembers and views on the effectiveness of these partnerships. To address these objectives, GAO sought and received data from three large mortgage servicers and a large credit union covering a large portion of all mortgage loans outstanding and potentially SCRA-eligible borrowers. GAO also reviewed documentation on DOD's partnerships and relevant education efforts related to SCRA mortgage protections. GAO interviewed DOD officials and partners who provided SCRA mortgage education and counseling.

What GAO Found

The number of servicemembers with mortgages eligible for Servicemembers Civil Relief Act (SCRA) mortgage protections is unknown because servicers have not collected this information in a comprehensive manner. Based on the limited and nongeneralizeable information that GAO obtained from the three mortgage servicers and the credit union, a small percentage of the total loan portfolios were identified as eligible for SCRA protections. Two large servicers had loan-level data on delinquency rates. For those identified as SCRA-eligible, rates ranged from 16 to 20 percent and from 4 to 8 percent for their other military borrowers. Delinquencies at the credit union were under 1 percent. Some servicemembers appeared to have benefitted from the SCRA interest rate cap of 6 percent, but many eligible borrowers had apparently not taken advantage of this protection. For example, at one institution 82 percent of those who could benefit from the interest rate caps still had mortgage rates above 6 percent. The data also were insufficient to assess the impact of SCRA protections after servicemembers left active duty, although one institution's limited data indicated that military borrowers had a higher risk of delinquency in the first year after leaving active duty. But those with SCRA protections also were more likely to cure delinquencies during this period than the institution's other military borrowers. Given the many limitations to the data, these results should only be considered illustrative. Most of these institutions indicated that they made recent changes to better identify SCRA-eligible borrowers and improve the accuracy of the data.
The Department of Defense (DOD) has partnerships with many federal agencies and nonprofit organizations to help provide financial education to servicemembers, but limited information on the effectiveness of these partnerships exists. DOD and its partners have focused on promoting general financial fitness rather than providing information about SCRA protections. But some partners provide SCRA outreach and support to servicemembers. For example, the Bureau of Consumer Financial Protection has an Office of Servicemember Affairs that provides SCRA outreach to servicemembers and mortgage servicers responsible for complying with the act. Although stakeholders GAO interviewed generally offered favorable views of these partnerships, some said obtaining additional information about educational resources and partnership performance could improve programs. However, DOD has not undertaken any formal evaluations of the effectiveness of these partnerships. This finding is consistent with GAO's July 2012 review of SCRA education efforts, which found that DOD had not assessed the effectiveness of its educational methods and therefore could not ensure it reached servicemembers in the most effective manner. GAO recommended in July 2012 that DOD assess the effectiveness of its efforts to educate servicemembers on SCRA to determine better ways for making servicemembers (including reservists) aware of SCRA rights and benefits. In response to that recommendation, as of December 2013, DOD was reviewing the results of its recent surveys on the overall financial well-being of military families and planned to use these results to adjust training and education for SCRA, as appropriate. GAO's current finding that many servicemembers did not appear to be taking advantage of the SCRA interest rate cap appears to reaffirm that DOD's SCRA education efforts could be improved and that an assessment of the effectiveness of these efforts is still warranted.