Military Search use case: borrower status during foreclosure

Foreclosure is a long process. Months can pass between a default notice, a referral, a filing, and a sale, and a borrower’s circumstances can change at any point along the way. One of those changes, entry into active military duty, brings protections under the Servicemembers Civil Relief Act (SCRA) that can require a postponement or court approval before the foreclosure goes forward.

This is the third article in our Military Search use case series, which looks at one industry at a time and the point in its process where a military status check belongs. Here, the industry is mortgage servicing, and the check belongs not at one moment but throughout the foreclosure timeline.

The scenario

Before and during foreclosure proceedings, a financial institution uses Quandis Military Search to query the Department of Defense’s Defense Manpower Data Center (DMDC) and determine whether a borrower is actively serving in the military.

Identifying a servicemember at this stage helps make sure that every foreclosure action complies with the SCRA, including any postponement or court approval the law requires. A result that came back clear at referral does not answer the question on the sale date, so the check is repeated at the milestones that matter.

Why one check is not enough

Most servicers run a military status check somewhere in their default process. The gaps tend to appear in three places:

• Timing. A check run at referral reflects status on that day. A borrower who enters active duty a few months later is protected on the date of the next action, whether or not anyone checked again.
• Dates of interest. Some decisions depend on status as of a specific past date, such as the origination or filing date, not just today.
• Volume. A default portfolio can include thousands of loans at different stages. Re-checking each one by hand before each step does not scale, and manual steps get skipped when volume spikes.

Military Search is built for this. It checks status as of any date of interest you supply, it can re-check a portfolio on a recurring schedule, and it reports exactly what changed since the last cycle.

What Military Search provides

For mortgage servicers and financial institutions, the capabilities that matter most are:

• Verified DMDC data. Results come directly from the Department of Defense, with an optional status certificate for each search.
• One-time or scheduled batch verifications. Check a single loan before a step, submit a batch before a sale calendar, or put the portfolio under monitoring so it is re-checked on a schedule.
• Audit-ready records. Keep results and certificates with each loan, with your loan number overlaid on the certificate, so examiners can see what was checked and when.
• API integration with foreclosure workflows. Call Military Search from your servicing platform through a REST API, so the check is a step the next action depends on.

Military Search is a business-to-business service for organizations with a permissible purpose to verify military status. It is not available to consumers.

A note on obligations

SCRA protections in foreclosure depend on the facts, including when the obligation arose and when the borrower’s service began or ended, and state foreclosure rules add their own requirements. This article describes the general shape of the obligation and is not legal advice. Confirm your specific requirements with counsel.

Avoiding costly missteps

A foreclosure that moves forward against a protected borrower is expensive to unwind and harmful to the servicemember. Checking status at each milestone, against the source of record, keeps protected borrowers visible for as long as the loan is in default.

To see how monitoring and date-of-interest searches work, read the Military Search product overview, or see how the check fits a servicing workflow on the Compliance and Risk solutions page.

The Military Search use case series

Each article in this series looks at one industry and the point in its process where a military status check belongs:

• Property managers: verifying tenant status before an eviction filing
• Telecommunications: verifying status before early termination fees
• Mortgage servicing: verifying borrower status before and during foreclosure
• Auto finance: verifying borrower status before repossession
• Law firms: SCRA verification as legal due diligence before filing