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#379359 - 06/30/05 04:09 PM SCRA- Changing the payment amount?
Anonymous
Unregistered

When a loan customer gets activated and we change the interest rate to 6%, is it ok to reduce the rate to 6% or de we have to leave it at the current rate and forgive that amount of interest to make it 6% including any type of fees. This is what we are doing now.The bank is notified that a customer is on active duty and he/she has a loan for 8%. We just lower the amount to 6% and when they return from active duty we change the rate back to 8%. Is this legal?

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Lending to Servicemembers (SCRA, JWNDAA), War, Terrorism
#379360 - 06/30/05 05:07 PM Re: SCRA- Changing the payment amount?
Beagles22 Offline
Power Poster
Joined: Jan 2004
Posts: 3,626
State of confusion
I am not sure I understand what you are currently doing. You need to reduce the payment amount in connection with the rate. You need to change the note rate to 6%, and the interest above and beyond is forgiven. You absolutely need to lower the payment amount, that is the purpose of this protection.
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#379361 - 06/30/05 06:25 PM Re: SCRA- Changing the payment amount?
Dan Persfull Online
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
"SEC. 207: MAXIMUM RATE OF INTEREST ON DEBTS INCURRED BEFORE MILITARY SERVICE

"(a) Interest Rate Limitation. --

(3) Prevention of acceleration of principal. -- The amount of any periodic payment due from a servicemember under the terms of the instrument that created an obligation or liability covered by this section shall be reduced by the amount of the interest forgiven under paragraph (2) that is allocable to the period for which such payment is made.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#379362 - 07/05/05 04:57 PM Re: SCRA- Changing the payment amount?
Suwannee Offline
Platinum Poster
Suwannee
Joined: Jun 2002
Posts: 641
Florida
You should check with your accounting area to determine how your institution will handle this. For tracking and reporting purposes, they might want the rate to remain as is and credit the account with the overage. Also, if you are servicing the loan for an investor, you need to know how that investor expects you to service the loan.
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