Is a bank required to obtain and maintain from the borrower both a written request for relief and a copy of the military orders?

Yes, the SCRA says the rate cap is not invoked until the servicemember provides written notice and a copy of the orders. In the past, the customer has brought us a letter along with a copy of the orders. We kept them in the file.

The financial institution is not required to obtain or maintain a written request for relief or copies of the servicemember's orders. The financial institution is free to honor any verbal request if it so desires based on any or no documentation.

The regulation does however require the servicemember to request the rate relief in writing before the financial institution is "mandated" to comply with the rate relief provision.

Keep in mind though that other protections of the SCRA, such as foreclosure restrictions, are automatic regardless if requested by the servicemember.

Dan, The SCRA requires written notification.



`SEC. 207. MAXIMUM RATE OF INTEREST ON DEBTS INCURRED BEFORE MILITARY
SERVICE.


``(b) Implementation of Limitation.--
``(1) Written notice to creditor.--In order for an
obligation or liability of a servicemember to be subject to the
interest rate limitation in subsection (a), the servicemember
shall provide to the creditor written notice and a copy of the
military orders calling the servicemember to military service
and any orders further extending military service, not later
than 180 days after the date of the servicemember's termination
or release from military service.
``(2) Limitation effective as of date of order to active
duty.--Upon receipt of written notice and a copy of orders
calling a servicemember to military service, the creditor shall
treat the debt in accordance with subsection (a), effective as
of the date on which the servicemember is called to military
service.

That is saying exactly what I said in my 2nd paragraph above. Before the loan is subject to, or IOWs before the FI is required/mandated to provide the rate relief the service member must provide the FI a written request and a copy of their orders, but it does not prevent the FI from providing the rate relief without that information if it so desires. It also does not prevent the FI from providing rate relief on post active duty loans if that's what they want to do.

That makes sense. We had always been told we had to have everything in writing BEFORE we could lower the rate. Dan, thank you for clearing that up for us.

That is most likely the FI's policy for processing the request for rate relief. I would suspect with the revisions the majority of FIs have adopted such a policy.

And you're welcome.

adding to this....we have received orders that say the period of active duty is not to exceed 400 days. after that 400 days can we adjust the interst rate back to its original rate when we made the loan? i found were it talks about mortgage loans but not about consumer. this is a consumer note.

We put a follow up in our system for 30 days prior to the "estimated" termination date. We send a courtesy letter informing them our records indicate their active duty terminates on X and if their active duty has been extended to inform us. If they don't respond we will increase the rate.