Servicemembers Civil Relief Act (SCRA)
The Servicemembers Civil Relief Act (SCRA) is a federal law designed to provide financial and legal protections for active-duty military personnel, reservists, and members of the National Guard when called to active duty. The Act aims to ease financial burdens on servicemembers and their families during periods of military service.
Key Protections
For mortgage lending and other financial obligations, key provisions of the SCRA include:
- Interest Rate Cap: For obligations incurred before active duty, the interest rate is capped at 6% per year during the period of military service. This cap applies to mortgage loans, credit cards, and other debts.
- Foreclosure Protection: Servicemembers are protected from foreclosure or forced sale of their property without a court order during their period of military service and, in some cases, for a period thereafter.
- Eviction Protection: Similar protections apply to eviction from rental property.
- Lease Termination: Servicemembers may terminate residential and automobile leases without penalty under certain conditions related to military orders.
Compliance
Lenders and servicers must verify a borrower's military status to ensure compliance with the SCRA. Violations can result in significant penalties.
Related Concepts
Service-Connected Disability
A service-connected disability is a disability incurred or aggravated during military service. This status is determined by the U.S. Department of Veterans Affairs (VA).
Veterans with a service-connected disability are eligible for specific benefits and exemptions, including:
- VA Funding Fee Exemption: Exemption from paying the VA Funding Fee and Payment System (FFPS) on a VA Loan Entitlement, Certificate of Eligibility (COE), and Loan Guaranty Certificate (LGC).
- State-Level Benefits: Eligibility for specific state-level benefits, such as those provided by the Department of Veterans Affairs (VA), which can offer significant property tax relief depending on the disability rating.
Surviving spouses of veterans who died from a service-connected disability may also qualify for these exemptions.
Source material
- florida_va_loan_article.html
Study the full exam sections
This page is reference detail. The five SAFE exam study guides put it in context.