|
|
|
Determining Reduced Payment Amount under SCRA
by Andy Zavoina, BOL Guru
Guru Bios
Question: SCRA Section 207a(3) indicates that the amount of a periodic payment shall be reduced by the amount of the interest forgiven in excess of 6%. Is this contemplated in the actual rate reduction to 6%, or should this be a separate calculation reducing the minimum payment due by the forgiven interest amount in that pay period?
Answer: The bottom line is that you reduce the interest rate to 6%. The corresponding payment drops based on this. The SSCRA was clear on this in the intent, but it didn't specifically say so and some lenders failed to change the payment. This defeated the purpose of the law.
You also need to review what the SCRA includes as interest. Late fees would be. So if you go to 6%, cancel out late fees that may accrue as this would be usurious if any accrue.
First published on BankersOnline.com 1/30/06
Privacy Policy Disclaimer Recommend This Site ! Contact Us
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.
|
|
|
|
Print Friendly!
Email This Article!
Discuss NOW!