SCRA and MLA (Servicemember Civil Relief Act; Military Lending Act Flashcards
Who is covered under the SCRA rules, aka who is considered to be a Servicemember?
- Any member of the Army, Navy, Air Force, Marine Corps and Coast Guard on active duty
- Any member of a reserve component called to active duty
- National Guard personnel under a call or order to active duty for 30 or more consecutive days for purposes of responding to a national emergency
What are the three general requirements of the SCRA?
- A creditor cannot take adverse action against a consumer if they exercise their rights under the SCRA.
- Dependents are entitled to SCRA protections if the dependent’s ability to comply with an obligation (by reason of the servicemember’s military service).
- Interest rates of pre-existing debts are limited to a max of 6% for servicemember (and spouse w/ joint obligations)
How long must a lender comply with the SCRA interest rate limitations?
- During the period of military service plus one year thereafter, if the obligation or liability consists of a mortgage, trust deed, or other security in the nature of a mortgage, OR
- During the period of military service for all other obligations or liabilities
Under SCRA’s requirements regarding the interest rate limitation, what happens if the interest rate of the obligation exceeds 6%?
The amount of the interest that exceeds 6% (and would otherwise be incurred but for the prohibition) must be FORGIVEN
What is a servicemember required to provide to the creditor in order to exercise his or her rights under the SCRA?
Written notice and a copy of the military orders calling the servicemember to service, including a certified letter from a commanding officer
Regarding SCRA’s interest rate limitation, when must a servicemember provide written notice?
No later than 180 days after the date of the servicemember’s termination or release from military service
Regarding SCRA’s interest rate limitation, what is the alternative option that a creditor may use in lieu of written notice?
Information retrieved from the Defense Manpower Data Center through a creditor’s normal business reviews to confirm the servicemember is on active duty
When are the protections under SCRA applicable to a servicemember (when do they begin)?
As the servicemember, protections under SCRA apply as of the date the servicemember reports to active duty (the date that servicemember leaves civilian life).
When are the protections under SCRA applicable to a reservist (when do they begin)?
As a reservist, protections under SCRA apply/begin as of the date that the reservist receives his or her orders
Who can be considered a dependent of a servicemember?
Includes the servicemember’s spouse, child and any individual for whom the servicemember provided at least one-half of their support during 180 days preceding the application for relief under the SCRA
When would the interest rate limitation under the SCRA apply to a dependent of a servicemember?
When the obligation or liability was incurred jointly by the servicemember and their spouse
What is the definition of consumer credit under the MLA?
Credit offered or extended to a covered borrower primarily for personal, household, family purposes and is subject to a finance charge OR payable by a written agreement in more than 4 installments
What are the exceptions to the definition of “consumer credit” under the MLA?
- A residential mortgage which is secured by an interest in a dwelling
- The financing for a purchase of a motor vehicle when the credit is secured by the vehicle
- The financing for a purchase of personal property that is secured by the same personal property
- Any credit transaction that is exempt from Reg Z (not subject to disclosure requirements under Reg Z)
- Any credit transaction where the consumer is not a covered borrower by using a method and by complying with the recordkeeping requirements
