The Servicemembers Civil Relief Act (SCRA) is a federal law providing various civil and financial protections for active duty military members. According to the Supreme Court, these safeguards are to be implemented with "an eye friendly to those who dropped their affairs to answer their country's call."
Generally, SCRA protections cover active duty military members as well as Guard and Reserve members who've been activated under federal orders. As a rule of thumb, the SCRA's protections usually apply as long as the relevant financial agreement, such as a lease or loan, predates enlistment or the period of active duty service.
The SCRA does not cover retired military members, Reserve or Guard members not on active duty or National Guard members activated under state orders.
The most significant mortgage protections the SCRA covers are interest rate caps, foreclosure avoidance and lease and eviction safeguards.
The SCRA caps interest rates for mortgages (along with car loans, credit cards and other debts) at 6% for eligible service members and their spouses during the term of service and for one year after. To secure this protection, you may need to show that your order to complete military service has "materially affected" your finances.
A key requirement for the 6% rate cap is that the loan needs to predate enlistment or the period of active duty service. You must also be the borrower or the co-borrower on the loan or have assumed the loan.
The SCRA also prevents lenders and servicers from foreclosing on a service member's home so long as they took out the mortgage before entering active duty service. This protection begins during your period of service through the 12 months following your separation from the military.
You are not required to have previously informed your lender or servicer about your service member status to invoke your SCRA rights. Unless you have waived your rights, you can't be foreclosed on without a court order, even if you live in a state that doesn't require a court order to foreclose. In cases that appear before a judge, the SCRA also protects you from default judgments if you cannot appear in court.
Upon your request, a court may pause or stay on a foreclosure proceeding or adjust the loan if you can demonstrate your ability to pay was affected by active duty service.
The SCRA can also prevent creditors from repossessing your personal property without a court order. Like the other SCRA protections, this only applies if you purchased your personal property or signed a lease agreement before entering active duty service. You must also have made a payment on that property before entering active duty service.
While the SCRA may protect you from repossessions, failing to pay your financial obligations may lead to a breach of your contract, potentially incurring additional charges like late fees. Furthermore, your delinquent payments could be reported to credit bureaus, and the creditor may pursue debt recovery avenues, including the possibility of initiating a legal suit against you.
If you entered into a housing lease before commencing active duty service, are currently serving on active duty and receive Permanent Change of Station (PCS) or deployment orders lasting at least 90 days, you should have the option to terminate your housing lease without incurring any penalties under SCRA.
You may also terminate a lease on a vehicle with no penalty if you entered the lease before active duty service or were called onto active duty service for 180 days or longer. Additionally, if you were on active duty and received a PCS order to relocate from inside the continental United States (CONUS) to outside the continental United States (OCONUS), these protections should also apply.
To terminate either housing or auto leases, you or a representative acting with power of attorney on your behalf must provide your leasing agent with a written termination notice, a copy of your orders, or a letter from your commanding officer. This can be completed through electronic or physical means.
While it isn't explicitly part of the SCRA, service members deployed to a combat zone or a qualified hazardous zone can also take advantage of a Special Deposit Program that allows a 10% interest rate on any money deposited while deployed.
If eligible, you can start allotment payments up to $10,000 and receive a rate one to 10 times higher than banks and credit unions. The money will remain in a high-interest account until the deployment ends but can be withdrawn if hard times arise. With the power of attorney, military spouses can also initiate this process.
To receive SCRA relief, you must typically submit a written request to your lender or servicer. It's important to note that invoking your SCRA rights cannot negatively impact your credit score.
Generally, you must submit the following documents to your lender or loan servicers to verify your military orders and secure your SCRA benefits:
Lenders and creditors don't always grant SCRA protections automatically. Contact your nearest military legal assistance office to learn more about SCRA eligibility and all the available civil and financial protections. A legal assistance office can also help explain how to best ask for any SCRA safeguards you might be entitled to.
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