The Service Members Civil Relief Act (SCRA), recently expanded, is a federal law that provides protections for military members entering into service, called to active duty, or deployed service members. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed service members. Lenders must be aware of these protections, and be careful not to violate the rights of these protected individuals because of a recent heightened scrutiny of lenders to ensure compliance with existing federal laws protecting service members. Recent successes in Department of Justice have resulted in more complaints against lenders with DoJ. There is also a rise in SCRA lawsuits filed by individual service members against their lenders, including community banks and credit unions, demanding damages plus all attorneys’ fees and costs.
Though most of the focus is on service members on the brink of foreclosure, the law also provides that no interest above 6 percent can accrue for credit obligations while on active duty, (only obligations incurred prior to active duty), nor can that excess interest become due once the service member leaves active duty, instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.
Additionally, the law was expanded to protect service members and their families from eviction from housing while on active duty due to nonpayment of rents. Under the new provisions this protection extends to leases up to $2,932.31 a month, adjusted annually. The law also provides a service member who receives permanent change of station orders or who is deployed to a new location for 90 days or more the right to terminate a housing lease. Creditors’ compliance with the Service Members Civil Relief requires a delicate balance.
Should you have any questions on how to ensure your institution is in compliance with the SCRA, contact the attorneys at Dalton & Tomich, PLC.