We identified two customers that were/ are on potential active duty. They never informed us of this but their mailing addresses indicate they are possibly overseas. The one loan was for $500 and was charged-off as there was never a payment made. The rate on this loan was 15%. My question is, can the customer (service member) come back to us with active duty paper work during the time frame, are we then liable to rebate the interest for the difference? Also, what happens with the overall charge-off status at that point?

A second customer we identified a mortgage loan which was paid in full, however the interest rate at that time was 6.25%. Again, we were not notified but I am curious if that customer/ service member comes back to us and provides evidence that he was active during the term of the loan, are we required to rebate the excess interest if that is the case?

Thank you in advance.

They have to notify you within 180 days of end of service for rate reduction.

Agree. And you would have to go back and refund the interest over 6% for the entire duration of their service.

I don't anticipate the charge-off status would change, unless the reduction in interest for the full term of their service causes the amount they did pay to have paid off the entire loan.

Customer #1: since a payment was never made, the active duty servicemember was not harmed in any way by the 15% interest rate. Assuming customer #1 made multiple payments at the 15% interest rate and then provided you with copies of his/her orders within 180 days of the end of service, you would have had to pay borrower the difference. To receive the 6% interest rate, the customer does need to provide a copy of the orders or other paperwork proving active duty status during the time period in question. The charge-off status would remain unchanged by the act of providing orders.

Customer #2: even if the loan has been paid in full, if the customer brings in active duty orders within 180 days of end of military service demonstrating she/he was active duty at any point during the life of the loan, you must pay borrower the difference between 6% and 6.25% interest. Again, the burden is on the servicemember to provide proof of active duty status to receive the interest rate reduction.