Slobodan Milosevic doesn't know it -- he probably doesn't care, either -- but the Yugoslav president has given a large number of reservists the opportunity to lower their mortgage rates without refinancing, at least for a while.

Under the Soldiers' and Sailors Civil Relief Act, a little known and often misunderstood law passed by Congress in 1940 and amended several times since then, the home owners among the weekend warriors called to active duty to force Milosevic out of Kosovo may be allowed to lower their loan rates.

So far, only 33,000 part-timers have been called up by the Defense Department. But if the conflict spreads, or if NATO decides to send in ground troops, that number could grow. During the Gulf War in 1990, more than 230,000 troops were called to active duty, triggering the law on the grandest scale ever, according to Alan Wolf, a Newport Beach, Calif., attorney who specializes in mortgage law.

The basic thrust of the Act is that service personnel should not be disadvantaged when called to active duty. As such, it requires lenders to reduce the mortgage payments of those who enter active service after becoming home owners to 6 percent and forgive the difference.

It also protects borrowers against legal proceedings. It waives the collection of late fees, prohibits lenders from starting or continuing foreclosure without written consent of the borrower or a court order, and suspends any statutory redemption period if the mortgage already has been foreclosed upon.

The law requires borrowers to petition the court for relief, so assistance isn't automatic. But during the Gulf War, Fannie Mae and Freddie Mac, the nation's largest mortgage investors, waived that requirement, accepting instead a copy of the individual's orders as the only evidence necessary. And they could do so again if the size of the call-up increases.

Last time, the two huge financial institutions even extended the law to individuals who worked in geographic areas tied "very closely" economically to military installations and were impacted by the shipment of troops to the Middle East.

Fannie Mae and Freddie Mac do not control all mortgages, so their marching orders aren't followed by every lender. But many follow the lead of the two government-sponsored enterprises, so it was worth it back then for anyone struggling to make a house payment as a result of the conflict to contact their lenders. And it may once again be worthwhile to pick up the phone, so stay tuned.

Under the law, relief begins when an individual receives orders to report to active duty and ends 90 days after separation. During that time, the difference between the note rate and 6 percent is forgiven, not deferred. In other words, the lender must absorb the loss, not carry it over until the reservist goes back to work.

During the Gulf War, though, if the borrower could show extreme hardship, Fannie and Freddie went even further, allowing lenders to accept payments lower than those calculated at 6 percent. Ideally, the payment should have been large enough to cover escrow deposits for property taxes and homeowner's insurance. But no minimum was set; each case was decided on its own merits.

Published: June 7, 1999

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.