Servicemembers Civil Relief Act

Following is general information for banks on the Servicemembers Civil Relief Act (SCRA), formerly known as the Soldiers' and Sailors' Civil Relief Act of 1940.

  • Upon being called to active duty, the SCRA allows members of the Army, Navy, Air Force, Marines, Coast Guard, National Guard and officers of the Public Health Service or the National Oceanic and Atmospheric Administration and their spouses to reduce the interest rate on any "pre-active duty" loans to six percent or less.
  • Any active duty servicemember who has a loan made before he/she went on active duty is eligible.
  • The highest rate of interest allowed under SCRA is 6%. Interest is defined as including any fees (including late fees, etc.) except bona fide insurance. Any interest above 6% charged on a loan covered by this section is forgiven, not deferred.
  • The interest rate limitation must begin on the borrower's entry into active duty. If the lender does not learn of the commencement of active duty before it occurs, the interest rate reduction must be backdated to the first day of active duty.
  • Servicemembers have from the date of active duty until 180 days after release from active duty to request the interest rate reduction allowed by the SCRA. This request must be in writing and include a copy of his/her orders.
  • The interest rate reduction ends on the last day of the servicemember's active duty. The bank should obtain a written statement from the borrower specifying the date that his/her active service was completed.