We have a situation where a customer was called to active duty for 9 months. Currently, he is inactive at this time. He is requesting relief from the SSCRA. Is the bank required to go back for the 9 months he was in active duty and make adjustments to his mortgage and other loans now? His loans are current and did not go 30 days late while on duty. Reimbursement of any late charges would be made, but if the bank did not know he was on active duty at that time. Is it necessary to go back and recalculate the rates on his loans at 6.0%? I do not seem to find that specific issue. Can someone direct me?

Is the bank required to go back and make the adjustments? I haven't seen anything in SSCRA that says you have to make the adjustment retroactive to a period of time. So I say NO, you are not required to. You will have to evaluate the costs vs the potential public relations outcome.

All of the discussions I seen on this subject center around learning before they go active or while they are on active duty.

Yes. Go back to the active duty date and adjust from that date forward. The borrower may not have known the protection was available or was not able to request it for some reason. While there was ample demonstration that there is sufficient funds to pay the debt (assuming others debts are current and his family is eating), I don't know of any opinion that provides you an "out" unless you want to contest it. Even then I think you'd have to do it and reverse it later if you won.

Dean and I seem to disagree and that is fine. I stated some reasons above, but would add this from the Act.

No obligation or liability bearing interest at a rate in excess of 6 percent per year incurred by a person in military service before that person's entry into that service shall, during any part of the period of military service, bear interest at a rate in excess of 6 percent per year unless, in the opinion of the court, upon application thereto by the obligee, the ability of such person in military service to pay interest upon such obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of such service, in which case the court may make such order as in its opinion may be just. As used in this section the term ''interest'' includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) in respect of such obligation or liability.

It doesn't provide protection from a date they request it, but applies to debts incurred prior to military service (active duty).

I'm with Andy on this one. Even if we get the request while they are still on active duty, the request is always backdated to the date they entered active duty, not the date of request.

My response to the question "Is it required" comes from personal experience. My brother in-law completed a 6 month tour of duty in Germany in July of this year. (BTW, he brought back a really nice cookoo-clock!) After which, he went back onto reserve status. He notified his lender (car dealer)in September that he was on active duty for 6 months and wanted the relief accorded the SSCRA. The lender decided that since the period in question had come and gone and he did not notify them either before or during active duty, they had no obligation to offer him relief. They pointed to sec. 515 of the Act which says it is the Defense Dept's. obligation to make him aware of any rights under the Act.

I agree, if you make a public relations case out of this, the lender would probably reimburse him for the difference. But at some point, the borrower has a responsibility to notify you of their status. Now, whether that responsibility extends to after the fact, I guess that is where we disagree.

I know from our standpoint, we have received requests from service members before and while they are on active duty for relief, and have afforded it. To date, I don't know of anyone who has requested relief after completing active duty.

I would challenge it from the aspect that the servicemember being notified from the Government doesn't address the servicemember notifying a creditor.

I believe protection is afforded for the period of military service.

In your brother's case, there may not be enough of a difference in the 6 months interest difference to fight about it. But I believe the dealer was wrong. But that is just my opinion.

I'm with Andy on this one. I believe that the dealer is wrong. That said, it may not matter to the dealer that he has a very unhappy customer and 6 months' interest may not be worth the trouble to fight it; but the customer is going to have 0 loyalty to them financing another purchase for him and he will have lots to choose from when he buys again.

Banks, on the other hand, probably would be better off adjusting the interest for the 6 mos. and keeping the customer coming back for his deposit and loan needs. In fact, if he were my customer, I would make sure that he knew that his bank would have done the right thing for him and looks forward to financing his next vehicle.

The courts have consistently held that the statute should be construed so as to favor the serviceperson. If you denied it, and it went to court, the odds aregood that the courts would hold for the plaintiff, and award punitive damages and fees to boot.

Add the reputation risk to that, and it's a no-brainer: adjust the loan.

I have to agree with PBrinker. It may not be spelled out directly in the law but I think your reputation is worth more than the few dollars you may lose in interest. He notified you and that was his only obligation. I wouldn't set a time limit and take the lawsuit...not only do you lose his respect but the respect of the entire community! It's not worth it...adjust the previously made loan payments accordingly.

Thanks for all the input. All of you have made good points for consideration. I am leaning on behalf of the borrower also, but now will management see it in that light??? I guess in reading Mary Beth Guard's article, the key is that the serviceperson does not have to request the reduction, it is automatic. Thanks again for your comments.