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#1423782 - 08/04/10 12:10 AM SCRA Interest Rate Reduction for a Reservist
Wino Banker Offline
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Our customer is an air force reservist who is reporting for his annual two week training at a nearby base. Annual training is clearly stated on his orders. He is requesting an interest rate reduction on his mortgage to 6% for the next 12 months under the provisions of HERA which extend some of the benefits of SCRA to 12 months. The FDIC quidance on SCRA clearly defines active military service to include "annual training duty" and doesn't seem to differentiate between full-time military and the reserves. USC 10(101)(d)(6)(A) seems to define active duty for reservists as "180 consecutive days" of service. There are additional elements of the US Code which apply to reservists under USC 10(106), but it doesn't seem to clarify "active duty."

Does this reservist's two weeks of annual training qualify him for 12 months of reduced interest rate on his mortgage? I have read through many of the posts on this topic and I am more confused than ever. Thanks!

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#1423887 - 08/04/10 01:41 PM Re: SCRA Interest Rate Reduction for a Reservist Wino Banker
Phoenix Offline
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Check with your state's law - it may define reservists' roles slightly differently.
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#1424141 - 08/04/10 04:37 PM Re: SCRA Interest Rate Reduction for a Reservist Phoenix
Dan Persfull Offline
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Although annual training is considered active duty they must be called to active duty for no less than 30 days to qualify for the rate reduction.

www.justice.gov/crt/military/documents/jag_article.pdf

If they persist I would ask for a complete financial dislosure to show that the 2 weeks training will produce a financial hardship. Most likely he is getting his military pay for the training and also being paid by his employer or taking accrued paid time off.
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#1424459 - 08/04/10 10:47 PM Re: SCRA Interest Rate Reduction for a Reservist Dan Persfull
Wino Banker Offline
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Thanks for the link to the SCRA booklet, however I'm further confused by the active duty footnote which appears on page 16: "As the definition provides, “active duty” includes “annual training duty.” Id. § 101(d)(1). This is typically the two-week to twenty-nine-day duty that a reservist will perform. See id. § 10147(a). See also 32 U.S.C. § 502(a). In fact, the courts have acknowledged as much. See In re Brazas, 278 Ill. App.3d 1, 662 N.E.2d 559 (1996)"

This seems to support the customer's position that two weeks training will grant them eligibility for 12 months of reduced interest on their mortgage. If that's the case it stands to reason that we will repeat this scenario with this customer every 12 months when they report again for their annual training.

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#1424538 - 08/05/10 01:20 PM Re: SCRA Interest Rate Reduction for a Reservist Wino Banker
Dan Persfull Offline
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Bloomington, IN
I repeat. If they persist I would ask for a complete financial dislosure to show that the 2 weeks training will produce a financial hardship. Most likely he is getting his military pay for the training and also being paid by his employer or taking accrued paid time off.
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#1424627 - 08/05/10 02:51 PM Re: SCRA Interest Rate Reduction for a Reservist Dan Persfull
Wino Banker Offline
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I fully understand the process for and the advantages of requesting financial disclosure information from the borrower. I am sure you are correct that he is receiving his military pay + his employer's pay and that no financial hardship is being incurred. I have advised management of this requirement.

At this point it is about understanding the law and having procedures in place which comply. It appears that two weeks of training for reservists is sufficient to meet the minimum eligibility requirement for active duty. 30 days of service seems to only apply to the National Guard.

Thanks.

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#1429318 - 08/13/10 11:30 PM Re: SCRA Interest Rate Reduction for a Reservist Wino Banker
Andy_Z Offline
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(d) Duty Status. - The following definitions relating to duty
status apply in this title:
(1) The term "active duty" means full-time duty in the active
military service of the United States. Such term includes full-
time training duty, annual training duty, and attendance, while
in the active military service, at a school designated as a
service school by law or by the Secretary of the military
department concerned. Such term does not include full-time
National Guard duty.


Clearly 2 weeks of active duty is not intended to grant 12 months of benefits, at which time he'll do another 2 weeks of duty and the cycle repeats itself. But I can't argue with the thought process. Then you come down to having to go to court to prove he isn't financially harmed.
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#1587376 - 08/04/11 11:40 AM Re: SCRA Interest Rate Reduction for a Reservist Andy_Z
goingtoexperts Offline
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So does the 30 day rule apply only to National Guard members called to active duty?

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