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#1844163 - 08/20/13 05:48 PM just told us now!!
Trees Offline
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John Doe has had loans since before 2008. he advises us last week that he has been in active duty since October, 2010 up to and including December, 2012. Wanta all the loans reviewed and adjustments made. Loans carry more than a 6% rate, including the business loan for which he is responsible.

I know that timing does come into play but aren't there some instances where the bank is not required to back track on old loans?

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Lending to Servicemembers (SCRA, JWNDAA), War, Terrorism
#1844218 - 08/20/13 06:54 PM Re: just told us now!! Trees
James M. Moore Offline
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James M. Moore
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Georgia
You may find this beneficial if he is no longer active duty:

(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.
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#1844223 - 08/20/13 07:01 PM Re: just told us now!! Trees
RockChucker, CAMS Offline
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The Country
Nice find James! I am putting this somewhere safe so I can find it in the future
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#1844270 - 08/20/13 07:44 PM Re: just told us now!! Trees
Trees Offline
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OK, James. That's good. Do you know whether this 180 day time period applies to all loans, including res. mortgages? If it does, then we really do not need to do any look back on this individual's loans. The time period has elapsed. We are not trying to be difficult and we do everything we can for those servicememebers that come forward with their docs. However, this man wants us to go back to the original date of his orders and reimburse him accordingly.

If the 180 days does not apply, do we have to go back to the original date of the orders??

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#1844282 - 08/20/13 08:05 PM Re: just told us now!! Trees
Dan Persfull Offline
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Bloomington, IN
However, this man wants us to go back to the original date of his orders and reimburse him accordingly.

The SCRA rate reduction applies to ALL loans opened prior to the servicemember's active duty status therefore under the SCRA he has every right to expect you to do that unless you want to go to court and attempt to prove he suffered no hardship during his time of active duty.

BTW, if he has any loans that paid off during that time you will also have to review those loans and reimburse accordingly.
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#1844290 - 08/20/13 08:14 PM Re: just told us now!! Trees
Dan Persfull Offline
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One additional bit of information. If during his active duty period he was charged any late charges or other fees other than bona fide insurance those are consider interest under the SCRA definition and they would have to be included in your calculation of interest charges.
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#1844300 - 08/20/13 08:27 PM Re: just told us now!! Trees
Trees Offline
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OK, I am slowly getting my ducks in a row on this issue. The rate reduction applies to all loans as of the date of the active duty, regardless of when they were booked. Typically we get these docs right away, so there is no issue like this one where we are getting the active duty notice 2+years late and more than 180 days since being discharged from active duty. So, Dan, does the 180 days concept apply in this case? Do we still need to go back in time, over 2 years, and recalculate the payment diff, application of payments, etc. etc.
Late fees, etc. never came into play so we are dealing only with the P&I.

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#1844303 - 08/20/13 08:30 PM Re: just told us now!! Trees
James M. Moore Offline
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Georgia
As Mr. Dan described...you will have to go back to the original date of the orders if you do not meet the 180 day notification exception.

Last edited by James M. Moore; 08/20/13 08:37 PM.
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#1844309 - 08/20/13 08:45 PM Re: just told us now!! Trees
Dan Persfull Offline
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Bloomington, IN
more than 180 days since being discharged from active duty

If 180 days has elapsed since the end of his active duty and he did not notify you within that period you have no obligation under the SCRA to make any reimbursement.

How you want to proceed from a public relation standpoint is entirely up to you.

...you do not have to provide him a lump sum payment. You may reduce the payment amounts going forward by the amount he is due if his loans are outstanding. (Principle reduction method)

For loans that would be subject to reimbursement you would have to provide the reimbursement directly to the servicemember.

The SCRA prohibits the acceleration of the principle and by doing a monthly principle reduction with the money due the servicemember would be accelerating the principle.
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#1844319 - 08/20/13 09:01 PM Re: just told us now!! Trees
James M. Moore Offline
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James M. Moore
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Georgia
...you do not have to provide him a lump sum payment. You may reduce the payment amounts going forward by the amount he is due if his loans are outstanding. (Principle reduction method)

I caught that when reading back through and edited. I concur with not being able to accelerate principle repayment.
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#1844414 - 08/21/13 02:25 PM Re: just told us now!! Trees
Trees Offline
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Ok, I now have enough info to develop our action plan. many thanks. I took a great BOL webinar on this topic with a great manual and the manual has gone missing. hence, the questions.

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#1844432 - 08/21/13 02:53 PM Re: just told us now!! Trees
Trees Offline
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Another question came up and we are disagreeing here. As one of the loans is a res. mortgage, aren't we obligated to go out 1 year from the completion of active duty? The docs. say 12/28/2012. He notified us mid-July in writing. We were thinking that, for res. mortgages, he had until 12/28/2013 to notify us.

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#1844445 - 08/21/13 03:12 PM Re: just told us now!! Trees
John Burnett Offline
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Cape Cod
Although the term of protection on a mortgage loan was expanded to include the year following completion of active duty, the provision giving the SM 180 days to notify you in writing has not changed.

That said, you can certainly act on a notice given after the end of the 180 day deadline if you wish.
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#1844828 - 08/22/13 01:37 PM Re: just told us now!! John Burnett
A_G Offline
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Imo, the potential reputational risk fallout from this highly outweighs complying with the soldier's request.

I can't even begin to imagine the negative publicity this could generate. Again, jmo.
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#1844833 - 08/22/13 01:39 PM Re: just told us now!! Trees
manimal Offline
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I would tend to agree with AG... but at the same time... "one-offs" are so dangerous in this age of Fair Lending... this is a tough one.
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#1848386 - 09/03/13 08:49 PM Re: just told us now!! Trees
Trees Offline
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Made the decision, now we have some questions. We will retrace the loans back to the date of the orders. So, the delimma, we are doing this way after the fact. The customer made payments on the res. mortgge over and above the P&I. We recalculated the payment spread assuming we had lowered the rate to 6%. However, we also included his principal payments. In the end, we need to reimburse the customer $3,000. We offered to reduce the loand with this amount or give him a check. He is just now late with his payment (first time). He asked that we apply the excess to the payment. We agreed, as this helps out the customer and we are doing everything we can to help him. Now, lets suppose we take the money to make the P&I payment. We also now have to put the loan back to the iriginal P&I payments. As we used the money to make a payment rather than a lump sum payment or principal reduction, when we set the P&I to the original amount, we don't appear to have save the customer any time on the loan, which should be the case as he made extra payments.We think its just a coincidence that this is the case. So, we are having an amortization issue. I saw where sometimes this is the case and the customer will end up with some kind of balloon payment to make. Please review our scenario. Did we do something wrong? the deal with the money for payment is struck. We don't want to undo this and its what the customer wanted. HELP!

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#1848890 - 09/05/13 10:32 AM Re: just told us now!! Trees
Andy_Z Offline
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I'm not following the loan without getting a feel for the amort. - He made payments.
- You recalculated the interest to not >6% month to month.
- He paid extra and you applied that to the principal without bumping the due date?
- You now have a check for him for $3K and he asked that it be applied against the current payment owed.
- Your loan is now current or still past due. It is what it is.

It would seem you have gone a little beyond what was required. A key issue I didn't see scanning the above was "why" the request was delayed. A PR "gun to the bank's head" would be "I was in the VA learning how to use my new legs." That would require more compassion than "I could afford the payments the whole time I was in, but now I can't and I'm looking for money." I would also ensure you have a well documented procedure and that this person had not contacted you within the covered period and is just now doing a follow-up.
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#1849012 - 09/05/13 03:25 PM Re: just told us now!! Trees
NotDoneYet Offline
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PA
If this customer is even remotely similar to my son who served 8 yrs in Air Force Intelligence and suffered PTSD following his final tour in Iraq, it isn't easy to admit to a "mental" injury. It took well over a year before he could even make simple decisions, other than hit the floor when he heard anything similar to gun fire.
Once he was out, it took a good 1 1/2 yrs to find a job better than minimum wage at the local gas station, because there are lots of vets looking for one. Btw, he worked 2 of those jobs until he got his nursing degree.

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#1849200 - 09/05/13 08:13 PM Re: just told us now!! Trees
Trees Offline
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Thanks, Andy. Nothing was said to us when he surfaced recently to the effect "I told you or I sent the docs. but didn't follow up, or similar".

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