I am conducting a review of our compliance with the SCRA. I sent an email to a select group of employees to test their knowledge of SCRA procedures. As part of the procedures, we maintain a spreadsheet of customers that have notified us that they are on active duty. There is one name on the list - which did not seem right to me. So, I also asked them if they knew of any customers that are on active duty. One loan officer said she knew of a mortgage loan customer that was called to active duty after his secured his loan. He is not on our list. She said his dad (who is also on the loan) came in and mentioned it to her one day in passing. We never heard directly from the servicemember.

I verified his status and he went active on 03-13-08. The rate on his loan right now is 7.00. I know the customer is supposed to notify us in writing...

What would you do?

Under the "old" rule you would have to reduce the rate but under the new rule they have to notify you in writing and present their orders to request relief. Just keep in mind they have up to 18 months after their active duty ends to request the relief and the relief is retroactive to the date they became an active duty servicemember. And under the new rules the mortgage would maintain the reduce rate for 12 months after the active duty ended.

Your options are:

1. Do nothing and if they at a later date properly request the relief honor the request and retro it to the date of active duty.

2. Be proactive, and provide a customer service and notify the servicemember that through a conversation with their father that you became aware of their eligibility for relief under the SCRA and advise them that your bank would like to assist them to make thing easier while they are active duty and of the documentation they need to provide for you to activate the relief.

3. Automatically provide the relief, again as a customer service.

I would propose to management Dan's options 1 & 2. Personally, I like 2 as a customer service issue and to avoid a "surprise" later. I would believe the SMs hear enough about SCRA to know it exists. I'd rather have something in my file that says "I don't need it, my income was not affected" than worry about getting notice a year from now. I think you could still be held if he requested protections later, but at least you'd have something if it got nasty.

On the other hand, sending a "do you want these protections" letter may give you a customer a life when he feels like you are looking out for his benefit.