On May 15, 2020, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act (H.R. 6800, or the “HEROES Act”). The legislation is a controversial behemoth. It would provide another round of stimulus checks and student loan forgiveness, impose a 12-month eviction moratorium, expand mortgage forbearance relief, provide a safe harbor and liquidity facility for mortgage servicers, and impose significant restrictions on debt collection activity during the COVID-19 public health emergency. While Republicans and Democrats are butting heads over the bill, its financial protections for veterans and servicemembers could survive.
Separate from the bill’s generally applicable restrictions on debt collection activity mentioned above (summarized in Mayer Brown’s Legal Update), the bill would suspend the debt collection activities of the Department of Veterans Affairs (“VA”) during the emergency period. Specifically, if the bill were enacted, the VA would be prohibited from collecting or recording debts arising from certain veterans’ health care and other VA-administered benefits. The VA also would be prohibited from issuing a notice of debt to a consumer reporting agency, allowing interest to accrue on the debt, or applying any administrative fee to the debt. Those prohibitions would apply until 60 days after the end of the emergency period. While those prohibitions expressly apply to the VA’s collection activities, to the extent the agency refers delinquent debts to the private sector for collection, the prohibition also may affect the ability of those entities to pursue the debts or collect interest or fees.
The HEROES Act also would amend the Servicemembers Civil Relief Act by adding certain protections for servicemembers who receive stop movement orders in response to local, national, and global emergencies. The amendments would provide those servicemembers the right to cancel residential leases, vehicle leases, and internet, cable, and phone contracts without penalty. That amendment seeks to prevent the “double-billing” of servicemembers who were previously issued orders to move, but then received a stop movement order due to the pandemic, and who may have housing or vehicle leases or utility contracts in separate locations. Currently, a servicemember who received relocation orders to deploy for 90 days or more could terminate those leases or contracts without penalty, but there was no express protection if he or she then received a stop movement order. The amendment would not, however, require refunds for lease payments already made. The amendment would apply retroactively to orders issued on or after March 1, 2020, and would be permanent – unlike some of the HEROES Act’s other provisions, this stop-movement relief would not expire at the end of the COVID-19 emergency period.
The Senate leadership is not expected to allow consideration of the HEROES Act as it stands, and President Trump has promised to veto it in any case. However, there may be bipartisan support for some of the Act’s protections. Senate Veterans’ Affairs Committee Chairman Jerry Moran (R-Kan.) and Ranking Member Jon Tester (D-Mont.) introduced the same SCRA amendments as a separate bill just weeks ago. Accordingly, the financial protections for veterans and servicemembers may be rescued in the end.