Servicemembers Civil Relief Act (SCRA) Common Questions

Summary: Reservists, guardsmen and other military personnel can find answers to questions about mortgage payment relief and protection from foreclosure provided by the Servicemembers Civil Relief Act of 2003 (formerly The Soldiers' and Sailors' Civil Relief Act of 1940).

Who is eligible for the Servicemembers Civil Relief Act (SCRA)? The Act applies to active duty military personnel who had a mortgage obligation before enlistment or before being ordered to active duty. This includes: - Members of the Army, Navy, Marine Corps, Air Force, Coast Guard - Commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration engaged in active service - Reservists ordered to report for military service - People ordered to report for induction (training) under the Military Selective Service Act - Guardsmen called to active service for more than 30 consecutive days. - In limited situations, dependents of servicemembers are also entitled to protections. Am I entitled to debt payment relief? The Act limits interest that may be charged on mortgages taken out by a servicemember (including debts incurred jointly with a spouse) before he or she entered into active military service. At your request, lenders must reduce the interest rate to no more than 6% per year during the period of active military service and recalculate your payments to reflect the lower rate. This provision applies to both conventional and government-insured mortgages. Is the interest rate limitation automatic? No. To ask for this temporary interest rate reduction, you must submit a written request to your mortgage lender and include a copy of your military orders. The request may be submitted as soon as the orders are issued, but no later than 180 days after the date of your release from active duty military service. Am I eligible even if I can afford to pay my mortgage at a higher interest rate? If a mortgage lender believes that military service has not affected your ability to repay your mortgage, they have the right to ask a court to grant relief from the interest rate reduction. This is does not happen very often. What if I can't afford to pay my mortgage even at the lower rate?- (Top) Your mortgage lender may let you stop paying the principal amount due on your loan during active duty service. Lenders are not required to do this but they generally try to work with servicemembers to keep them in their homes. You will still owe this amount, but will not have to repay it until after you complete active duty service. Most lenders also have other programs to assist borrowers who can't make their mortgage payments. If you or your spouse finds yourself in this position at any time before or after active duty service, contact your lender immediately and ask about loss mitigation options. If you have an FHA-insured loan and are having difficulty making mortgage payments, you may also be eligible for special forbearance and other loss mitigation options. Am I protected against foreclosure? Mortgage lenders may not foreclose while you are on active duty or within 90 days after military service without court approval., A lender would be required to show in court that your ability to repay the debt was not affected by your military service. What information do I need to provide to my lender? When you or your representative contacts your mortgage lender, you should provide the following information: - Notice that you have been called to active duty - A copy of the orders from the military notifying you of your activation - Your FHA case number - Evidence that the debt precedes your activation date - HUD has reminded FHA lenders of their obligation to follow the SCRA. When notified that a borrower is on active military duty, an FHA lender must inform the borrower or representative of the adjusted payment amount due, provide adjusted coupons or billings, and ensure adjusted payments are not considered insufficient payments. Will my payments change later? Will I need to pay back the interest rate "subsidy" at a later date? The change in interest rate is not a subsidy. Interest in excess of 6% per year that would otherwise have been charged is forgiven. However, the reduction in the interest rate and monthly payment amount only applies during the period of active duty. Once the period of active military service ends, the interest rate will revert back to the original interest rate, and payments will be recalculated accordingly. How long does the benefit last? Does the period begin and end with my tour of duty? Interest rate reductions are only for the period of active military service. Other benefits, such as postponement (delaying) of monthly principal payments on the loan and restrictions on foreclosure, may begin immediately upon assignment to active military service and end on the third month following the term of active duty assignment. How can I learn more about relief available to active duty military personnel? Servicemembers who have questions about the SCRA or the protections they may be entitled to, can contact their unit judge advocate or installation legal assistance officer. Dependents of servicemembers can also contact or visit local military legal assistance offices where they live. A military legal assistance office locator for each branch of the armed forces is available at www.legalassistance.law.af.mil/content/locator.php