Institutions are advised to be reminded of a relatively recent revision to the Servicemember Civil Relief Act (SCRA) regarding the 6% rule. ProBank consultants have been finding numerous institutions that are not aware of this change. On August 13, 2018, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (HR 5515; Pub Law 115-232) included a slight revision to the 6% interest rate requirement.

Background – The SCRA includes many benefits and protections for servicemembers. Included in those benefits and protections is a provision that caps interest (including fees and charges) at 6% on financial obligations that were incurred prior to the borrower’s military service. 50 U.S.C. 3937. In order for an institution to be required to lower the rate to 6%, the servicemember must provide written notice to the creditor and either:

• a copy of the military orders calling the servicemember to military service (and any orders extending military service), not later than 180 days after the date of the servicemember’s termination or release from military service; or

• any other appropriate indicator of military service, including a certified letter from a commanding officer.

Law – The law was revised to add the following possibility: A creditor may use, instead of a written notice by the servicemember with proof of service, information retrieved from the Defense Manpower Data Center through the creditor’s normal business reviews of such Center for purposes of obtaining information indicating the servicemember is on active duty.

A creditor that uses the information retrieved from the Defense Manpower Data Center with respect to a servicemember has not violated the 6% requirement if:

• such information indicates that, on the date the creditor retrieves such information, the servicemember is not on active duty; and

• the creditor has not, by the end of the 180-day period after the date of the servicemember’s termination or release, received from the servicemember the written notice and proof of service with respect to the servicemember.


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