We have a customer who enlisted on the army just prior to 9/11. He was deployed to Afganistan 2 months ago. Is he entitled to the rate reduction under SSCRA? Our SVP/Senior Loan Officer seem to think that he is not since he enlisted as opposed to being drafted.

If your borrower has gone into active military service, then he is entitled to rate relief for previously contracted debts. It doesn't matter how he got there--just the fact that he is now active duty. (See Sec. 526 of the SSCRA.)

It sounds like your lender is trying to remember the "little twist" to the reg. As I recall, the bank does not have to adjust the rate on loans made during the time that the soldier is on active duty. It is best to lower the rate than risk the bad PR---do you really think a judge would rule in favor of the bank against someone who is serving his country?

The reasoning behind the regulation is to protect those that were going about their daily lives and, due to some event, they left their families, etc. behind to go and protect freedom. The soldier should not be worrying about his family's financial situation and whether or not they will be homeless, car-less, etc. This appears to be your situation.

Richard is dead on. If the debt was created prior to entering the service, SSCRA does apply. If he was in the service when the debt was created, he is not entitled to SSCRA benefits.

Remember why the law exists. It was an equalizer to help compensate and provide some relief for those who left higher paying civilian jobs to go serve their country. It wasn't for when they were drafted, it was for anyone doing this. And it isn't because they went overseas or into battle. It takes many soldiers and sailors to serve a country. They all get protection.

In fact, he is entitled to the rate relief from the day he went into the service over a year ago - not just from when he was deployed to Afghanistan. His deployment to Afghanistan is irrelevant to SSCRA relief. Being drafted vs. volunteering is also not an issue. There hasn't been anyone drafted into the US military since 1974, so if that was the criteria, no one would even be talking about SSCRA today.

For example, suppose he had a loan at 9% with your bank since January, 2001. He is entitled to a rate reduction to 6% on that loan effective the day he joined the service just prior to 9/11/01. You'll need to go back to that point in time and make some adjustments.

But suppose he took out a loan with your bank in October, 2001 at 9%. He is not entitled, under SSCRA, to any relief on this loan even though he is now deployed to Afghanistan. He entered into the loan after he entered military service. You may want to, however, consider forbearance if he becomes delinquent on this debt while he's in Afghanistan, because of the potential negative publicity. But you are under no obligation to reduce this interest rate or provide any other relief under SSCRA.

Depends on when the loan was made. If after 9/11, he gets no rate relief just because he got shipped over. However, if the loan was made prior to when he enlisted, he gets the relief. Whether he's peeling spuds stateside or dodging bullets, he gets the relief. If the loan existed prior to enlisting I'm really surprised it's taken him this long to ask. The relief is used as a recruiting tool and is covered in basic training as something they have the right to pursue.

Thanks guys you have been a lot of help. Those are my feelings exactly. I asked our SVP/SLO for months to write procedures for the loan officers to follow in case we had a customer request the rate reduction, only to end up writing them myself. He instructed the loan officers not to advertise the SSCRA. He feels that it would be too much trouble to set up.

Only after I went to our CEO and informed him that I wasn't getting anywhere did the SLO approve my procedures. Who cares how much trouble it is set up, these men and women are fighting for our country. Anyway, now I have it in black and white, which is the only way I've found to handle him. Thanks again. I am ready for battle.