For some time now, USAA has been running national commercials about their dedication to the U.S. Military.  One particular commercial that's been running regularly here in metro Detroit features the tagline:   "Financial advice, for people who share our military values".   My advice to USAA?  Take a closer look at your loss mitigation practices, before boasting about your moral code.

To be fair, I don't make a habit of taking bank slogans seriously, then holding those lenders accountable when they fail to live up to their own billing.

However, as the housing crisis drags on, we're seeing one segment of homeowners getting hit harder than others – active military.

Service men and women, who purchased homes near whichever base they were stationed prior to the housing bubble bursting, are now finding that the stress of a transfer to a new base has multiplied considerably when it comes to selling their current residence.

While several lenders currently feature advertising campaigns that promote their military relationships, one lender in particular serves the military community and their families exclusively – USAA.

Formed in1922 by a group of U.S Army officers, USAA lends primarily to active military, veterans and their families – a segment of the population, some would argue, deserve a little more understanding and flexibility, due to the nature of their jobs.

Short Sale Legal Services has dealt with USAA only twice, but both experiences were horrible.

In each instance, the people who contacted us were active duty (Army & Air Force), being transferred across the country. As those in the military know, roots aren't often planted while on active duty; transfers are a common part of the job.  Still, that hasn't prevented those who serve our country from buying homes for decades, living there for a couple years, then selling.  These purchases typically aren't made with the anticipation of a significant profit in mind; rather, they are made to provide some stability for themselves and/or family, in a very unstable profession.

Based on their history, USAA should have a solid understanding of how common military transfers are, however it seems they do not.  Both borrowers we counseled were advised by USAA that they must agree to pay back the entire amount of the deficiency, or a short sale would not be accepted; this rigid policy is hardly standard practice with most lenders in our current market.

To be fair, USAA has no legal obligation to consider a short sale.  They aren't required to work with people and are well within their right to collect what is due to them.  However, that doesn't make it the correct thing to do – professionally or morally.

For starters, it makes sense from a business standpoint to consider a short sale.  Getting a home off the books for fair market value, without having to spend money on the foreclosure process and pursue someone who will, most likely be unable to cover even fraction of the deficiency, allows lenders to minimize losses.

Further, short sales will not financially ruin a customer, who, likely, is a casualty of the mortgage meltdown, not a cause of it.

A military transfer, typically, is not an option.   USAA is aware of this; this lender, over all lenders, should also know that when it lends money, there is a solid chance that the home will need to be sold well before the end of a 30-year mortgage period.  USAA was able to safely assume for decades that whomever was borrowing the money would be able to sell the house and pay back the mortgage; isn't a borrower entitled to the same mindset?

Sadly, we were unable to assist either of our two potential clients.  USAA demanded upwards of $125k in both instances – amounts that were nowhere near what our clients could afford.   Both clients are now in financial ruin; both contemplate bankruptcy.  This is a bitter pill for service men and women in dealing with a lender who's customer service statement includes:

            "Industry leading service that puts our memberships' needs first. We're dedicated to the financial well-being of members of the military and their families for generations to come."

The housing crisis is not going away any time soon; thousands more service men and women will find themselves in the same position as our subject clients did and many will be customers of USAA.

Refusing to provide realistic options for customers who have virtually no control over their situation– treating our service men and women in a manner not even on par with the policies of most other lending institutions – puts neither it's members needs first, nor helps USAA's financial well-being.  If USAA is serious about "values" (military or any other), working with people in a professional, compassionate and realistic manner makes far more sense then its current policy of all or nothing.