SCRA Protection – court relief of interest rate reduction

Compliance > Lending > Service Members > SCRA
Q: How does the term materially affected impact a service member’s ability to claim an interest rate reduction on a loan? If, for example, a borrower with a loan voluntarily joins the army, but his or her income does not decrease, do the rate reductions under the SCRA apply?
 
A:  The rate reductions under section 527 of the SCRA apply unless a court grants the creditor relief. If the court concludes that the service member’s ability to pay interest on the obligation at a rate in excess of 6 percent is not materially affected by the military service, it can order the service member to continue to pay the loan at the original contract rate.
 
 
ADDITIONAL INFORMATION – This Q&A was released by the Federal Reserve Board, in follow up to their Servicemember Financial Protection Webinar that was presented on September 10, 2012 - https://www.consumercomplianceoutlook.org/2013/first-quarter/servicemember-financial-protection-webinar/
 

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