The OCC issued a bulletin that provides general information about the Servicemembers Civil Relief Act. Among other things, the Act provides for interest rate adjustments on certain debts and for temporary suspension of legal proceedings that may adversely affect the rights of servicemembers during their military service. The bulletin reminds national banks that the Act requires creditors to forgive any interest in excess of 6% per year on any debts that a servicemember incurred prior to entering into the military. Creditors must maintain this rate reduction for the servicemember’s entire military career and, in the case of debts secured by a mortgage, for an additional year after the end of service. The bulletin also reminds banks of other provisions of the Act, including, (1) for debts secured by a mortgage entered into by a servicemember before entering the military, creditors may not initiate foreclosure proceedings until nine months after the end of military service, (2) creditors may not terminate any installment contract for the purchase or lease of real or personal property (including motor vehicles) entered into before or during military service, (3) creditors may not repossess any property under an installment contract entered into by a servicemember without a court order, and (4) servicemembers may terminate residential and motor vehicle leases if the servicemember entered into military service after executing the lease, or executed the lease while in military service but later received orders for a permanent change of station. Click here for the bulletin.
Alert November 04, 2008