Military Lending Act/Servicemember Civil Relief Act

Articles

FAQs

MLA Coverage

MLA Covered Borrower

MLA Military Annual Percentage Rate (MAPR)

MLA Requirements for Covered Loans

MLA Prohibitions

SCRA

MLA Coverage

Question: How is the scope of the Military Lending Act (MLA) changing effective October 3, 2016?

Answer: Before October 2016, the MLA covered consumer loans that met the definition of payday loans, vehicle title loans or refund anticipation loans. The manner in which these loans were defined limited the scope of coverage to short term loans of 181 days or less. As of October 3, 2016, coverage expanded to all “consumer credit” transactions made to covered borrowers. The MLA redefined the term “consumer credit” to match the definition under Regulation Z with some very important exclusions. As of October 3, 2016, the MLA covers credit offered or extended to a “covered borrower” primarily for personal, family or household use if the loan is subject to a finance charge or is payable by a written agreement in more than four installments. This definition includes both open-end and closed-end credit. Moreover, the definition of covered loans is not limited by dollar amount or loan term as they were previously.

Question: What are the important exclusions to the definition of “consumer credit” in the MLA?

Answer: The MLA definition of “consumer credit” does not include residential mortgages, transactions to purchase motor vehicles that are secured by that vehicle, transactions to purchase personal property secured by the property being purchase, transactions that are exempt from Reg. Z (e.g., because they are in excess the regulation threshold) and any transaction for credit for which the consumer is not a covered borrower.

Question: Would a boat or motorcycle be considered a motor vehicle?

Answer: The term “motor vehicle” is not defined within the regulation. For the “purchase” exclusion, the statute reads “loan procured in the course of purchasing a car”. . . “and is secured by the car”. However, section 323.3(f)(2)(ii) of the regulation merely states the credit transaction will be exempt from the definition of “consumer credit” if expressly intended to finance the purchase of a motor vehicle when the credit is secured by the vehicle being purchased.” It appears that the regulation extended coverage to any type of motor vehicle. While there is no reference to this section in the MLA rule, 40 CFR 85.1703 defines a motor vehicle as a vehicle that is self-propelled and capable of transporting a person or persons or any material unless it meets one or more of the following criteria:

Cannot exceed 25 miles per hour over level, paved surfaces
Lacks common features customarily associated with safe and practical street or highway use
Exhibits features which render its use on a street or highway unsafe, impractical or highly unlikely

Using this definition, a motorcycle would be considered a motor vehicle but a boat would not.

Question: Can you give me an example of “any transaction for credit for which consumer is not a covered borrower”?

Answer: This statement is referring to an application for credit by a person that does not meet the definition of “covered borrower” under the MLA. Specifically, a “covered borrower” is a consumer who is, at the time they become obligated on a consumer credit transaction or establish an account for consumer credit, a covered member (active duty as defined by the regulation) or a dependent of a covered member.

Question: Can you expand on “more than four installments”—what about a single pay loan or a 12 month loan with 2 payments?

Answer: For a credit transaction to be covered under Reg. Z, the credit must be for a consumer purpose (personal, family, or household purposes) and either subject to a finance charge or payable by written agreement in more than four installments. What this means is that to be subject to Reg. Z requirements, the credit is either subject to interest or requires the repayment under more than 4 installments. An example may be a loan made by a retailer to purchase furniture. The loan may not be subject to interest charges but if required to be repaid in 12 monthly installments, Reg. Z would still apply. This loan would be covered by Reg. Z since it meets the “subject to more than four installments” trigger. Since almost all loans originated by banks are subject to a finance charge (interest), they would be covered regardless of the number of payments required.

Question: We have a question regarding coverage under the Military Lending Act (MLA). We understand that purchase money loans secured by the vehicle or personal property being purchased are not covered under the MLA. What if the loan is secured by the new vehicle being purchased as well as an existing vehicle title on which we already have a lien filed? Also, what about when we refinance an existing purchase money consumer vehicle loan? Is the refinance transaction exempt from MLA coverage or not?

Answer: You are correct that the original purchase money transaction to acquire the vehicle or personal property secured by the purchased asset is NOT subject to MLA regulations. If however, the creditor requires additional collateral for the loan, such as another vehicle title or deposit account, the exemption is lost. Also, it’s important to note the purchase money exemption cannot include funds for purposes unrelated to the purchase (e.g., added $1,000 to consolidate credit card debt). Finally, only the purchase money transaction is exempt from MLA coverage; the refinancing of auto loan would be a covered transaction if made to a covered member.

MLA Covered Borrower

Question: Who is a “covered borrower” for purposes of the MLA?

Answer: The definition of “covered borrower” starts with the term “covered member.” A “covered member” is a member of the armed forces who is serving on active duty under a call or order for a period of 30 days or more or is serving on active guard and reserve duty. So reservists not on active duty or where their call to service specifically designates a time period of 30 days or less are not covered members. MLA protections also extend to the dependents of “covered members.” Thus, both the “covered member” and their dependents are considered “covered borrowers.”

Question: At what point do we make a determination as to whether or not the applicant is a “covered borrower” and how do we do this?

Answer: The rule actually does not require a creditor to validate an applicant’s “covered borrower” status. However, because the penalties for not providing covered borrowers their entitled disclosures, rights and protections are stiff, it stands to reason a creditor may want make such a determination. While the rule does not require the creditor to validate “covered borrower” status, it does provide safe harbor methods to do so. Those methods include:

Performing a single or batch record search by accessing the MLA database; or,
Obtaining a credit report from a nationwide consumer reporting agency or reseller who provides a consumer report.

Again, use of these safe harbor methods is optional. However, to obtain the safe harbor protections, the creditor must check the MLA database or obtain a credit report whenever a consumer applies for a new consumer credit product, initiates a covered transaction or establishes a new consumer credit account. The timing of this search is critical. The interpretive rule amendments issued on December 13th, 2017 by the Department of Defense indicates that the creditor should perform a covered borrower check at application or 30 days prior to application or during the course of processing the application. The important part is that the check cannot be done at the time of loan origination or after. The rule specifically prohibits a historic lookback.

Question: When verifying a consumer applicant’s status for the Military Lending Act, can we use either of the Department of Defense’s databases – the MLA database or the SCRA database?

Answer: No – The MLA and SCRA databases will produce different results because the MLA database covers a broader spectrum of people, including those in the National Guard and spouses and dependents that are not included in the SCRA. Thus, a person might be covered under MLA, but not SCRA. The MLA database is located at https://mla.dmdc.osd.mil/.

Question: For open-end credit, will we need to check the DoD list each month to make sure a borrower has not become a covered borrower?

Answer: No. While the MAPR must be calculated with each billing cycle for open-end credit, the covered borrower status must be determined prior to consummation. The creditor has no obligation to determine if a borrower becomes a “covered borrower” or is no longer a “covered borrower” after consummation – even for open-end credits. However, should a borrower leave the military service or no longer meet the definition of covered borrower, the creditor is allowed to discontinue any of the protections afforded under the Act. So while the creditor has no responsibility to validate the borrower’s status on an ongoing basis, if the creditor receives information that the borrower no longer meets the definition of a “covered borrower”, it can document that fact and cease the MAPR calculation and related fee and disclosure restrictions.

Question: What if borrower not covered at account opening, but later becomes covered. Must we keep checking database throughout the term of open-end plan?

Answer: No. See answer above.

Question: Would an individual on ADOS (Active Duty Order Status) and/or AGR (Active Guard Reserve) be considered a “Covered Person” as long as their Duty is for more than 30 days? Or is it consecutive 180 days as identified in 10 USC 101(d)(6)? Also, what do you mean Active Guard AND Reserve Duty?

Answer: The regulation states a “covered borrower” is a consumer who, at the time the consumer becomes obligated on a consumer credit transaction or establishes an account for consumer credit, is a covered member or his/her dependent. A covered member means a member of the armed forces who is serving on active duty pursuant to title 10, title 14 or title 32 of the United States Code, under a call or order that does not specify a period or 30 days or fewer; or Active Guard and Reserve Duty as defined in 10 U.S.C. 101(d)(6).

10 U.S.C. 101(d)(6) states:

(A) The term “active Guard and Reserve duty” means active duty performed by a member of a reserve component of the Army, Navy, Air Force, or Marine Corps, or full-time National Guard duty performed by a member of the National Guard pursuant to an order to full-time National Guard duty, for a period of 180 consecutive days or more for the purpose of organizing, administering, recruiting, instructing, or training the reserve components.
(B) Such term does not include the following:

(i) Duty performed as a member of the Reserve Forces Policy Board provided for under section 10301 of this title.
(ii) Duty performed as a property and fiscal officer under section 708 of title 32.
(iii) Duty performed for the purpose of interdiction and counter-drug activities for which funds have been provided under section 112 of title 32.
(iv) Duty performed as a general or flag officer.
(v) Service as a State director of the Selective Service System under section 10(b)(2) of the Military Selective Service Act (50 U.S.C. App. 460(b)(2)).[1]

Therefore, the 30 day time frame applies to active duty status other than active Guard and Reserve duty. As shown above, the active Guard and Reserve duty definition has the timeline of 180 consecutive days or more. The term AND is used since the definition clearly uses that term instead of “or”.

Question: Could a co-signor be protected under the MLA?

Answer: Yes, a co-signor could be a covered borrower under the rule as the definition of a covered borrower is a “a consumer who, at the time the consumer becomes obligated on a consumer credit transactions or establishes an account for consumer credit, is a covered member (as defined in paragraph (g)(2) of this section)…” A co-signor is a consumer who becomes primarily obligated, just like a co-borrower. The definition does not limit persons who would be protected to consumers who apply for credit or who receive benefit of proceeds, but rather to consumers who become obligated and are covered members.

MLA Military Annual Percentage Rate (MAPR)

Question: What fees are included in the MAPR calculation?

Answer: The MLA takes the current APR calculation and modifies it by adding additional fees in the definition of “interest.” The MAPR is referred to as an “all in” APR since in general, all fees and interest are included in the “interest” calculation when determining the MAPR. For example, the MAPR calculation includes application fees, credit reporting fees, annual fees (with some exceptions), service charges, renewal charges, credit insurance premiums or fees, any fee for debt cancellation contracts and fees for debt suspension agreements. The only fees excluded from this calculation are late payment fees, taxes or fees paid to public officials, default fees and participation or annual fees charged on open-end lines of credit when certain conditions are met. The MAPR on a “covered loan” to a “covered borrower” may not exceed 36 percent.

Question: What about VSI (Vendor Single Interest insurance) – should it be included in the MAPR calculation?

Answer: VSI is a common product required for certain loans (namely vehicle loans) and provides insurance on the collateral should the borrower fail to provide their own – thereby protecting the creditor from loss. A VSI fee is charged to borrowers at loan origination. Since this is a fee charged to the borrower, if the borrower is a “covered borrower” and the loan is a covered loan, this fee would need to be included in the MAPR calculation. The regulation requires “all cost elements associated with the extension of credit including fees, service charges, renewal charges, credit insurance premiums, any ancillary product sold with any extension of credit” other than those exempted (late fees, etc.) to be included in the MAPR calculation.

Question: Are open-end calculations only applicable to overdraft lines opened beginning 10/3/16 or will existing accounts be covered?

Answer: The requirement to calculate the MAPR and make fee adjustments only applies to covered loans or lines originated on or after October 3, 2016.

MLA Requirements for Covered Loans

Question: What obligations do we have if we make a “covered loan” to a “covered borrower?”

Answer: The MLA prohibits a creditor from extending a “covered loan” to a “covered borrower” with an MAPR (Military Annual Percentage Rate) that exceeds 36 percent. So a creditor’s first obligation is to ensure the loan’s MAPR is below this threshold. There are also disclosure requirements which contain three parts. The creditor is required to provide the MAPR disclosure at or before the time the borrower becomes obligated or establishes the account. This disclosure informs the borrower that important protections are available to members of the Armed Forces and their dependent relating to extensions of consumer credit. The disclosure further informs the borrower of the 36 percent MAPR limit and which fees may be included in that calculation. However, the creditor is not required to disclose to the borrower the actual calculated MAPR percentage for the credit product for which they applied. Second, the creditor is required to provide any disclosures required by Regulation Z and follow the delivery requirements of those disclosures. Lastly, the creditor must provide a clear description of the payment obligation to the borrower. The rule allows the payment schedule for a closed-end credit or the account opening disclosures for open-end credit to satisfy this requirement.

Question: If the bank chooses to use one of the safe harbor methods for determining the covered borrower status for MLA, how long must documentation of the check be retained?

Answer: In §232.9(e)(5)(ii) of the rule, it states that an action for civil liability can be taken for five years after the date on which a violation of the Act occurs. Therefore, to be able to show compliance with the rule when using one of the safe harbor methods, the recommended retention period for documentation of the covered borrower check is five years.

MLA Prohibitions

Question: Our consumer loans have a minimum finance charge. If a loan is paid off before the minimum finance charge is reached and we collect the minimum finance charge, would this be considered a prepayment penalty, thus prohibited on a covered loan to a covered borrower?

Answer: Section 232.8(a)(7) states it is “unlawful for any creditor to extend consumer credit to a covered borrower” if “a covered borrower is prohibited from prepaying the consumer credit or is charged a penalty fee for prepaying all or part of the consumer credit.” The regulation does not provide any additional clarity. It seems reasonable that if a “covered borrower” is charged a minimum finance charge, this would be considered a prepayment penalty since the “covered borrower” is charged an amount greater than accrued interest merely because he/she is paying the loan in advance.

Question: Can we deny loans to a covered borrower due to the restrictions?

Answer: The MLA states it is unlawful for a creditor to extend credit to a “covered borrower” if the loan includes any prohibitions. If the loan origination system is unable to provide modified loan documents removing any prohibitions, the creditor will not be able to originate that loan. Therefore, the application must be denied. Clearly the intent of the regulation is to allow reasonable access to low-cost credit for Service members and their dependents, not to deny them this access. Therefore, the Department strongly encourages banks to provide access to credit within the requirements of the MLA. Clearly this is a bank decision – one that should be made carefully considering the possible impact on the bank’s reputation and its communities.

Question: As a follow up to the previous question, if the creditor denies the loan, what reason would be used on the Notice of Action Taken disclosure?

Answer: This question is not answered in the MLA regulation. Reg. B (ECOA) requires the creditor to notify the applicant of adverse action within 30 days after receiving a completed application. Reg. B further requires the creditor to provide a written Notice of Action Taken that provides either a statement of the specific reasons for the action taken OR a disclosure of the applicant’s right to a statement of the specific reasons within 30 days. If the bank is not able to provide the required disclosures due to software limitations or does not offer a consumer loan product which meets all the MLA requirements, it would seem an appropriate denial reason would be “MLA Covered Loans not offered by the bank.” Again, this is not based on MLA regulatory text, but rather an interpretation of Reg. B notice.

If the bank provides the reasons for the denial, or the applicant requests the specific reasons after being notified of his/her right to request the information, Reg. B indicates the bank should disclose the specific factor or reason for denial. Unfortunately, no sample language is given in the MLA or Reg. B for this purpose when a creditor in unable to grant a credit request due to the inability to generate the disclosures required by law for the covered borrower. It would seem an appropriate denial reason would be “MLA Covered Loans not offered by the bank.” Again, this is not based on MLA regulatory text, but rather an interpretation of Reg. B notice requirements relative to MLA denials.

SCRA

Question: We recently received a letter from a current loan customer who enlisted into the Marines requesting that, per the Service Members Civil Relief Act, we “excuse” his car loan payments during the time he is attending training. The letter appears to have come from his U.S. Marine Corp. recruiting office and provides details regarding the dates he will be attending training, where he will be attending training, etc. We are aware under the SCRA that we must reduce the interest on any pre-existing obligations to 6 percent and also adjust the resulting payments but does the SCRA also require we “excuse” or waive the payments while covered service members are attending training or on active duty?

Answer: No, the SCRA does NOT require a creditor to waive or excuse loan payments for covered service members during periods of active duty or training. The IBA was able to confirm with the Marines the SCRA does NOT authorize or mandate suspension of loan payments. It is not clear at this time if the letter presented by your customer was fraudulent or simply provided by a recruiting office that misunderstood the requirements of the SCRA. Should your institution need to support its decision to not grant a waiver of loan payments, refer the borrower to the military legal aid society or Military One Source website for more information — specifically this article on financial protections.

Question: Who is eligible for benefits under the SCRA?

Answer: The SCRA protects all service members on federal “military service,” including:

Any member of the U.S. Armed Forces on active duty (Army, Navy, Air Force, Marine Corps and Coast Guard);
Any member of a reserve component called to active duty (Reserve, National Guard, and Air National Guard);
National Guard personnel under a call or order to active duty for more than 30 consecutive days under 32 U.S.C. § 502(f) for purposes of responding to a national emergency declared by the President and supported by federal funds;
Public Health Service and National Oceanic and Atmospheric Administration Officers detailed for duty with the armed forces.

In addition, many of the SCRA’s protections extend to dependents of active duty service members, but this coverage varies from section to section. SCRA protections may also extend to a partnership or a business; the test is generally whether the service member would be liable for the obligation of the partnership or business in which case SCRA protections generally apply. Finally, state laws may provide protections to members of state national guards that are called into service for the state.

Question: What is meant by “military service?”

Answer: The SCRA’s protections cover periods of “military service” which, in turn, are defined as periods of active duty status. For members of the regular Armed Forces, active duty begins the day they leave civilian life; for them active duty is not synonymous with deployment. For a member of a reserve component, in contrast, the protections the SCRA offers begin when a member of the Reserves or National Guard receives mobilization orders. It is initiated upon receipt of mobilization orders in order to give the soldier time to put his or her affairs in order. There may be several active duty periods during a member of the Reserves or National Guard’s career, including the initial active duty for training (“boot camp”) and subsequent call-ups for service, for example for service in the wars in Iraq or Afghanistan. Whether or not the service member volunteered for active duty is immaterial. Finally, military service also includes any period during which a service member is absent from duty because of sickness, wounds, leave, or other lawful cause.

Question: A customer is requesting we lower the rate on her loans under the Servicemembers Civil Relief Act because she has been called to active military duty. Does this act require interest rate adjustments even when the serviceperson is not engaged in a war?

Answer: Yes. The Soldiers’ and Sailors’ Civil Relief Act was enacted by Congress in 1940 and then revised in late 2003 and is now referred to as the Servicemembers Civil Relief Act. The Act is to assist and protect military personnel who are “materially affected” by military service in such a way that they would be unable to protect their civil rights. The act requires creditors to reduce the interest rate and re-amortize payments on loans made prior to the start of the person’s active military service to a maximum of 6%.

For full-time military service persons, the protections of the Act go into effect on their date of enlistment. This is true regardless of whether the United States is at war or at peace (50 U.S.C. §3911). For members of the Reserve and National Guard, the protections go into effect on the date they are called up to active duty. Once on active duty, all servicepersons are protected under the Act until their date of discharge from active service or death while in active service or up to one year after the servicemember’s military service for certain provisions. NOTE: This rate protection applies only to contract entered into before the person starts his or her active military service. Contracts entered into once that service has begun are not covered. In addition, Guaranteed Student Loans are not covered by any provisions of the Act.

Question: Under the Servicemember Civil Relief Act (SCRA), we are required to reduce the interest rate to 6% on pre-service obligations. Is the 6% the interest rate or the APR?

Answer: The 6% is the interest rate plus other charges. See section 207 of the Act:
. . . shall not bear interest at a rate in excess of 6 percent per year during the period of military service
(d) INTEREST- As used in this section, the term `interest’ includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.

It includes the interest rate plus any fees assessed to the loan. If you change the rate to 6% and charge a late fee, you have exceeded the interest rate allowable under the SCRA. The best course of action is to set the interest rate to 6% and waive all other fees for the term of active duty.

Question: When do the SCRA (Servicemembers’ Civil Relief Act) protections to military borrowers begin? We are trying to determine as of what day we should reduce a covered borrower’s interest rate to 6%.

Answer: A servicemember is protected during the period of his or her “military service” as defined under Section 511 of the SCRA. But one aspect of SCRA coverage that is sometimes overlooked is the fact that the servicemember is also protected during the time period before the commencement of his or her actual active duty date. In fact, the period of protection begins when he or she receives the orders to report. This time period has come to be called the “early alert” notification period. Section 516 of the SCRA sets out that a military reservist is entitled to the “rights and protections” of the SCRA “during the period beginning on the date of the member’s receipt of the order and ending on the date on which the member reports for military service.”

When examining the Department of Defense Manpower Data Center (DMDC) website for the status of the military borrower, the “early alert” or “Future Call-Up” section is the last row of boxes titled “Service Component.” The DMDC should serve as the principle means to determine whether a borrower is protected under the “early alert” notification scheme, or the SCRA in general. If there is some hint that the servicemember received the orders prior to the actual active duty start date, however, the period of protection should reflect the date of receipt.

The idea or rationale behind “early alert” notification section stems from the fact that military members often have numerous financial and personal obligations to get in order before deployment or mobilization, normally within 30 to 60 days. They could be looking at a long deployment that will impact finances and family life, so Congress saw fit to extend SCRA protections during this preparation or “spin up” period. Financial institutions should be aware of the “early notification” protection period when dealing with military borrowers. Also don’t forget the interest rate limitations applies for one year after the servicemember is relieved from active duty.

Question: At the time we lower the interest rate, are we also required to lower the payment?

Answer: Yes. In 1991, the OCC issued Advisory Letter AL-91-1, which, among other things, addressed this issue. The OCC stated, “We believe the payment should be reduced to the amount needed to fully amortize the loan at 6 percent by its scheduled maturity date.” The reduction in interest rate does not change the borrower’s obligation to repay the loan over its contractual term.

Question: At the time we lower the rate, do we need to have the customer sign a Note Modification Agreement or provide a new Truth-in-Lending disclosure?

Answer: The SCRA is silent in this area. Reg. Z does not require subsequent disclosures when an interest rate is reduced and the monthly payment is adjusted accordingly. If the payment is automatically debited from the borrower’s deposit account, the Reg. E automatic withdrawal request should be updated to reflect the new payment amount. The benefit of putting in place a modification agreement (if you are able to obtain the borrower’s signature) is that it gives the lender the opportunity to communicate and reiterate with the borrower the terms of lowered interest (the period of time the rate is offered, the adjusted payment amount, etc.) while re-reinforcing that no other terms of the contract have changed. The lender can also include language in the agreement making it clear to the borrower that it is the borrower’s responsibility to notify the lender when he or she completes active duty.

Question: May we charge a fee to the borrower to lower the rate, such as a note modification fee?

Answer: Charging a fee for lowering the rate goes against the entire premise of the SCRA and, quite frankly, would not reflect well upon your institution. With that being said, the SCRA includes in its definition of “interest” service charges, renewal charges, fees, or any other charges except bona fide insurance. Be sure to include any charges and fees in computing the 6 percent interest rate cap.

Question: Are safe deposit box leases covered in any manner by the SCRA (Servicemembers Civil Relief Act)?

Answer: Yes. A safe deposit box is a lease of property covered by section 532 of the statute. Specifically, the statute provides that “the lease or bailment of such property may not be rescinded or terminated for a breach of terms of the contract occurring before or during that person’s military service, nor may the property be repossessed for such break without a court order.”

In other words, if a servicemember has leased a safe deposit box, you can’t drill the box for non-payment of the rent without obtaining a court order first. This is also the section of the statue that places the responsibility on the bank to determine whether the service member is protected. The only time a servicemember has to request relief under the SCRA is when requesting a reduction in their interest rate.) Therefore, it’s up to the bank to determine if the safe deposit box lessee is a servicemember on active duty.

Question: Must we provide the HUD SCRA notice to ALL homeowners or just members of the military?

Answer: This was clarified by HUD when the notice was first issued in 2006, in HUD’s original Mortgagee Letter 2006-28 which states:

Servicemembers Civil Relief Act Notice
Pursuant to the statutory amendment, HUD has developed, in consultation with the Departments of Defense and Treasury, the form for the required notice of servicemember rights (Attachment 1). All mortgage loans, including conventional mortgages and mortgages insured by HUD are subject to the notification requirement that became effective June 5, 2006. The notice must:

- Be sent to all homeowners who are in default on a residential mortgage;
- Include the toll-free Military OneSource number to call if servicemembers or their dependents require further assistance (1-800-342-9647); and
- Be made within 45 days from the date a missed payment was due, unless the homeowner pays the overdue amount before the expiration of the 45-day period.

The reason the notice must be sent to ALL homeowners is the bank may not be aware that a borrower is in the military. In addition, this notice expands the original HUD Homeownership Counseling requirements, which must be sent to all delinquent homeowners.

Question: Is this a one-time notice sent after the borrower is 45-days past due?

Answer: The notice must be sent within 45 days following a missed payment, not after the 45 days is up. If you send it, and the person makes a payment after it is sent, no harm has been done. The required notice must be sent within 45 days following a missed payment EACH and every time a borrower becomes past due; it is not a one-time notice.

Question: We have a borrower with an individual car loan at the Bank. The borrower informs us that their spouse has recently received military orders to report for active duty and will be gone for an indefinite period of time. The borrower has requested the interest rate be reduced to six percent and payments adjusted accordingly on their individual loan at the Bank. Do we have to comply with this request?

Answer: No, unless the individual borrower is undertaking military service, the Bank is not under any obligation to make accommodations to reduce the interest rate and adjust payments. A qualified loan is one that is incurred by the servicemember or the servicemember jointly with a spouse, before entrance into military service.

Tools

Department of Defense MLA Database (for safe harbor purposes)

HUD SCRA Notice

HUD SCRA Notice (word format)

MLA Coverage Flowchart

MLA SCRA Comparison Guide