Thousands of military families in the Puget Sound region will be eligible to save hundreds of dollars or more each year on their mortgage under a new agreement with five of the nation's largest banks aimed at helping active-duty service members.
Under a 2003 law, active-duty service members are eligible to have their mortgage rates and some of their other debt fees capped at 6 percent. However, many military members aren't taking advantage of the benefits that could lower their mortgage payments.
Recent research from the Government Accountability Office has shown many military service members never take advantage of such benefits available to them under the Servicemembers Civil Relief Act either because they're unaware of the benefits or they don't want to face the paperwork involved.
To counter that, "We're announcing a new partnership in which some of America's biggest banks and financial institutions will simplify the process, proactively notify service members who qualify for lower rates and make it easier to enroll," President Barack Obama told veterans while speaking at the American Legion National Convention this week. "In other words, we're going to help more of our troops and military families own their own home without a crushing debt."
Wells Fargo, Bank of America, Ocwen Loan Servicing, CitiMortgage, and Quicken Loans -- have agreed to make the process easier and take a more proactive approach to reaching those who are eligible for the lower rates. The five lenders are pledging to make frequent checks of the Defense Department database to see if their customers can take advantage of any unclaimed benefits.
"Our preliminary analysis suggests that this new partnership will help tens of thousands of military families save money by reducing their mortgage interest rates," wrote Jeff Zients, National Economic Council director. "On a $200,000 mortgage, even an interest rate reduction of only one percent will result in over $1,500 a year in savings for our military families - money they can put towards daily expenses, retirement savings, or sending their children to college."