Steve Kolthoff has been a sailor in the Navy for 18 years. He has been deployed overseas six times and served in two wars. Lately, though, he has been preoccupied with a different kind of battle: a fight with his mortgage companies to save his family's home from foreclosure.
Three years ago, Kolthoff bought a three-bedroom, two-and-a-half bath house near the San Diego base where he's stationed. Initially, he had no problem making the $2000 monthly payment. But he didn't realize his adjustable rate could eventually double. Now, he has two mortgages and his monthly payment amounts to more than $4,000 – more than he can afford on his Navy salary. And Kolthoff says his lenders aren't willing to restructure the loan.
"I've called them several times, and then I had my real estate agent call to try to work some things out, to see if we could get the rates lowered," he says. "Basically, they told me to go pack sand, because they wouldn't work with me."
After inquiries from NPR, officials with Greenpoint Mortgage said they are willing to try to come up with a solution to keep Kolthoff in his home. The other company, National City Mortgage, declined to discuss the case in detail citing privacy concerns. But the sailor, who's now preparing for his seventh deployment, is frustrated over an ordeal that has been troubling him and his family for months.
Kolthoff's situation is becoming more common among military personnel. Though the Pentagon doesn't keep statistics on foreclosures, officials say a growing number of service members are struggling with their mortgages. Some, like Kolthoff, have seen big jumps in their monthly payments. Others — after being ordered to move to new duty stations — are stuck with homes they can't sell. A foreclosure can also result in other consequences for service members, including the loss of security clearances because of debt problems.
"Everybody knows the military makes a lot less than civilian counterparts, and it's a lot tougher on us, because we have to move all the time," Kolthoff says. "And it just stinks, basically, because there's nothing you can do about it."
Military Housing Clinics
So many service members in San Diego are having mortgage problems that the Coronado Naval Base recently hosted a clinic where military families could meet with housing counselors, foreclosure experts and even bankruptcy lawyers.
"Eighteen months ago, I might get one call a month about somebody who's worried about their mortgage," said Keith Kaufman, a manager of the Fleet and Family Support Center at the base. "If I get less than three calls a day now, that's a good day."
Navy spouse Suzanne Johnson was there hoping to get her family out from under two mortgages: one on the house they live in near her husband's base, the other on a home they've been trying to sell for more than a year. Johnson says the two mortgage payments have pushed their household budget beyond its limits and caused her to run up $50,000 in credit card debt. Because of her family's financial problems, she's actually looking forward to her husband's next deployment.
"When he leaves, I don't have to pay to feed him," she said. "It saves us on our budget."
Impact on Security Clearances
Johnson says her family considered filing for bankruptcy or letting their lender foreclose on one of their homes. But they worry that could harm her husband's career.
"My husband's security clearance is in jeopardy," she said. "A foreclosure or a bankruptcy, [any] bad marks on our record, it could directly affect him and his job. He could not be allowed to do what he does."
The issue of security clearances weighs heavily on people in the armed forces. Under longstanding military policy, credit histories are among several factors used to decide who can be trusted with classified information. The Pentagon says a small number of service members — fewer than 1 percent a year — lose their clearances because of debt problems.
But officers are quick to say that's unlikely to happen to otherwise responsible people who've become ensnared in the mortgage crisis.
"If an individual is seeking help, if they've shown they're working to find solutions to their financial difficulties, the command can help that individual preserve his clearance," says Navy Captain Mark Patton, who heads a military task force on financial issues.
Culture of Fear
Patton worries a "culture of fear" in the military keeps some service members from taking advantage of help that's available to them. Most bases have credit counselors and military lawyers, who may be able to get interest rates lowered or block imminent foreclosures.
While every home can't be saved, Patton strongly urges personnel to work with the military to try. He says service members who are stressed out over their mortgages may lose some of their edge on the battlefield or at the controls of a nuclear submarine.