SCRA Interest Cap

Did you know that under the Service Members Civil Relief Act (SCRA), any active duty servicemember who has credit card debt, auto loans, education loans and/or a mortgage, taken out prior to active duty, can have the interest capped at 6% under this federal law?

Marine Capt. Jonathon Rowles has brought to light serious violations of the Service Members Civil Relief Act. The purpose of the Servicemembers Civil Relief Act (SCRA) is to provide for, strengthen, and expedite the national defense by allowing servicemembers to devote their energies to the defense of the Nation, instead of worrying about their finances.

New York investment bank Morgan Stanley is facing questions in an ever-widening probe concerning wrongful foreclosures of borrowers on military deployment and overcharging thousands for mortgages. Also under scrutiny is J.P. Morgan Chase Co., who admitted to overcharging 4,500 active-duty military members, and wrongly foreclosing on 18 mortgages. These two companies are among other financial institutions that may have violated the Service Members Civil Relief Act. Any active duty servicemember that has credit card debt, auto loans, education loans and/or a mortgage, taken out prior to active duty, can have the interest capped at 6% under this federal law.

Senator Jack Reed, (D-RI) and Senator John Kerry (D-Mass.) are pushing for federal investigations of improper banking practices regarding mortgage protections. Quoted in USA Today, Senator Reed stated, “Soldiers fighting on the frontlines to protect our country shouldn”t have to needlessly fight with banks to protect their homes. JP Morgan Chase was violating the law, and I am concerned other banks may also be wrongly overcharging our troops or taking unfair advantage of their situation”.

Senator Kerry has written a letter to Ben Bernanke, Federal Reserve Chairman, asking for an investigation. Kerry authored legislation enacted in December that extended SCRA provisions, freezing home forclosures for nine months after a service member is released from active duty. The legislation also prohibits mortgage interest rates from being raised above 6% for one year after release from active duty.

Legal Loan Protection For Active Duty Military