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When World War II happened , the United States Congress once again enacted the Soldiers ’ and Sailors ’ Civil Relief Act of 1918 , except this time , it was called the Servicemembers ’ Civil Relief Act . Since 1940 , the statute has been amended 12 times with overwhelming support from Congress . Along with protections against default judgments in civil cases , the SCRA also offers protections against certain home foreclosures without a court order , the ability to end certain residential housing and automobile leases early without penalty , and the ability to reduce the interest rate on any pre-service obligations or liabilities to a maximum of 6 %.
When the SCRA Should be Applied
Provisions of the SCRA should be applied to active duty servicemembers across a number of military branches , including the Army , Marine Corps , Navy , Air Force , Space Force and Coast Guard . Additionally , it should be applied to reservists when serving in a Title 10 status , or National Guard members serving under a Title 32 502 ( f ) status or more than 30 consecutive days for the purpose of responding to a national emergency declared by the President and supported by federal funds .
The SCRA may be applied to active duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration , along with certain rights being applicable to dependents .
These rights may be applied retroactively in certain situations , with a 180-day grace period from the release of active duty , to begin benefits from the time of activation .
What the CFPB is Requesting of Financial Institutions
Based on the CFPB report , out of all the SCRA provisions , the most pertinent portion for financial institutions is in regard to the interest rate reduction and terminating residential housing and automobile leases .
According to the CFPB research , these opportunities and protections for servicemembers are critically underutilized , meaning that a lot of folks who would be eligible for the SCRA protections are , for various reasons , not receiving them .
The CFPB points out this is most likely due to consumers simply not knowing their rights , or how to receive certain benefits , and not likely due from financial institutions acting erroneously .
To make it easier for servicemembers to engage with the SCRA , the CFPB has offered up a few suggested solutions for financial institutions to consider implementing to better accommodate those who serve in the military :
1 . Apply the SCRA interest rate reductions for all accounts held at an institution by a servicemember if the servicemember invokes their rights for a single account .
2 . Automatically apply SCRA rights by periodically assessing the Defense Manpower Data Center ( DMDC ).
3 . Develop comprehensive and periodic indicators of SCRA interest rate reduction utilization .
Applying the SCRA Interest Rate Reduction for All Accounts Held by a Servicemember at an Institution
To receive the SCRA interest rate reduction , financial institutions request written documentation from the servicemember regarding their orders to active-duty service and a certified letter from a commanding officer showing the date active service began .
The CFPB is suggesting once a member has opted-in to their rights under the SCRA via this documentation procedure , the financial institution could apply the SCRA provision to all eligible accounts owned by that individual . This may make it easier for servicemembers to receive their SCRA rights , as well as limiting the amount of work a financial institution may have to do while organizing individual requests from the same individual for multiple accounts at the institution .
Automatically Applying SCRA Rights
Much like the federal student loan program , the CFPB is suggesting financial institutions do a periodic survey of the DMDC to identify any borrowers eligible for the SCRA provisions . By beginning this practice , research found federal student loan rate reductions had a dramatic increase in utilization . The CFPB believes this practice may increase utilization in financial institutions as well .
Providing the required documentation in written form can be a time consuming and sometimes confusing process . Although this format offers financial institutions
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