Why Do Mil Families Have Mortgage Woes?
So far, we are not among the 5,000 military folks in the news who may have been illegally foreclosed upon by mortgage lenders. So far, we do not need the protection of the Servicemembers Civil Relief Act (SCRA) or the Homeowners Assistance Program.
Because, so far, the kids, the underwater mortgage and I are afloat in Washington, D.C., while my servicemember is earning the lion's share of our income on a ship in Norfolk.
I love that hardworking little fella. Picture him (and thousands like him) sitting in gridlock every weekend so that we can make this military career, this family life, and this daunting mortgage work. Because that is what military people do: We make impossible things work.
So I was appalled last week to read that the foreclosure rate in military zip codes is four times higher than the national average. Nearly 20,000 military families faced foreclosure in 2010.
I could just picture all the things those military families must have done to pay their mortgages on time. How long were their houses on the market? How long did they live apart? How often did the renters who were supposed to be so reliable move out overnight? How much did they cry and blame and shame and argue? And how much of that happened during deployment?
Absolutely. According to DoD figures, military families move on average every 2.5 years. Even the most basic guides to home ownership say that you should plan to be in a house for three to five years before taking a mortgage. So why do military people who have a steady income have so much trouble buying and selling houses? From a military culture point of view, I think four factors are important to keep in mind:
Military families are ordered to move. Unlike civilian employers, the military moves people at every level from the rank and file to the four-starriest of four-star generals and admirals. Those servicemembers move on orders. That means that they are ordered to move and cannot choose to buy and sell houses at a financially advantageous time -- which may be the most important factor in understanding the military and their mortgages.
Military families are meant to live in the community. I know the rest of the world thinks military folks waltz onto a base and get assigned some nice government housing. Not so much. Even if you want housing or even desperately need housing, there are often year-long waiting lists for military housing. Thus, military life is designed so that the majority of military families live in off-base communities and are meant to buy or rent in the community immediately, even when they know little about that particular market.
Supply and demand affect family decisions. Let's please remember that the people who have been foreclosed upon most likely bought their houses during the housing boom. During that period, houses were selling overnight and there was little to rent. Some families were not only pushed by the enormous social forces urging home buying, but they were also pushed into buying because nothing else was available.
Wishful Thinking: Maybe this time we can stay. Military members may have orders that indicate that they will stay in their current assignment for three years. In fact, no one knows when the move is coming. The job might end in nine months -- so that it would be stupid to buy a house. Then again, follow-on orders could appear so that a member lives in a particular community for 15 years -- in which case, it would be stupid NOT to buy a house.
Military families are making the best decisions they can with the information they have available at the time. And sometimes they are wrong. That is why legislation like the SCRA is so necessary and why mortgage lenders must be held to the mark for military and civilian families alike.