Hello,

I am interested in knowing how you treat the spouse, co-borrower, etc. when you have a service member that dies.

• Do you keep the loan’s APR at 6%?
• Do you forgive the loan balance?
• Do you re-amortize the loan to bring it back up to the original APR and contract payment?
• Or are there other options that I am missing?

In California we have state law to follow that includes a six month deferment, for a service member who is missing in action or has died on active duty.

Thanks

The SCRA and state requirements can differ. Under the SCRA:

• Do you keep the loan’s APR at 6%? Not required when your borrower is no longer covered.
• Do you forgive the loan balance? Not required or even suggested.
• Do you re-amortize the loan to bring it back up to the original APR and contract payment? If it's not 6% it must go to something and the loan contract rules.
• Or are there other options that I am missing? You can always do more for a borrower, but not less than is required by law.

Consider a bank that has two loans under the SCRA vs a bank that caters to the military and has 99% of its customers in the military. My old bank was the former. I'd hear bankers with good intentions make off the cuff comments like "give all the military borrowers 6%" but that could kill some banks.

If you're not from CA, I suggest you keep reading any other comments.

California is not the only state that has regulations regarding missing in action or the death of the service member. I previously worked for a mortgage servicer, and almost every state has some guidance in their military/militia code. People tend to over look state law when dealing with SCRA. Most of the time states provide additional protections and benefits that SCRA does not cover.