Thread Options
#8762 - 01/11/02 04:18 PM SSCRA & OD checking acct
cool compliance Offline
New Poster
cool compliance
Joined: Aug 2001
Posts: 24
I have been approached by the Operations Officer of the bank inquiring if the SSCRA applies to Overdraft checking accts for a soldier that has been called to active duty. The OD's are recent (past 4-6 weeks)and the bank is wanting to close out the acct. (The acct. is also racking up OD fees.) I am of the understanding that SSCRA was intended only for obligations (loans). Is this correct? (I seem to be second guessing myself, however I do not want to overlook something.)Any help is appreciated!
_________________________
Cool Compliance If you can remain calm, you just don't know all the facts!

Return to Top
Lending to Servicemembers (SCRA, JWNDAA), War, Terrorism
#8763 - 01/11/02 04:28 PM Re: SSCRA & OD checking acct
Terry Offline
Gold Star
Terry
Joined: Sep 2001
Posts: 314
Midwest
I am not sure if overdrafts are considered within the definition of credit under the SSCRA. But even if they are, the Act would only apply to those that existed before the customer went into active duty, not those overdrafts that occured since then.

------------------
Terry Fitz, CRP
All statements & opinions are my own and not necessarily those of my employer.

_________________________
All statements are my own and not necessarily those of my employer.

Return to Top
#8764 - 01/11/02 04:39 PM Re: SSCRA & OD checking acct
Gotwood Offline
Platinum Poster
Joined: May 2001
Posts: 715
Is this an overdraft checking account or an account that is incurring overdrafts? An overdraft is an obligation(aka loan), therefore section 526 of the act would apply if this is an od checking account. What you have to be careful is that all interest, which includes all fees and charges except bona fide insurance, does not exceed 6% per year. If this is an account that is a regular checking acct incurring od's your per item is not subject to this reg.

If it is an overdraft checking account you can not deny or revoke credit simply because the borrower exercises their rights under the act(See Sec. 518).

Hope this helps.


Return to Top
#8765 - 01/11/02 04:51 PM Re: SSCRA & OD checking acct
cool compliance Offline
New Poster
cool compliance
Joined: Aug 2001
Posts: 24
For clarification.....this is a checking account that is incurring overdrafts.
_________________________
Cool Compliance If you can remain calm, you just don't know all the facts!

Return to Top
#8766 - 01/11/02 06:06 PM Re: SSCRA & OD checking acct
Bear Collector, CRCM Offline
Diamond Poster
Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
When we created our policy for SSCRA, we decided to construe the meaning of the law very liberally in favor of the service person. We decided to include deposit accounts under the protections provided. While there is no requirement to pay overdrafts on a DDA account for a service person, we determined that the portion of the law that prohibits "an adverse credit report" would apply to Chex Systems,so if we had to close or block a checking account we would not report the account to ChexSystems or the credit bureau.
Leslie
_________________________
Being kind is more important than being important.

Return to Top
#8767 - 01/11/02 07:46 PM Re: SSCRA & OD checking acct
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,216
On the Net
I want to reemphasize what Terry noted above. Checks written after being activated won't count anyway.

And I still have a difference of opinion with some that say you can't report anything derogatory on someone under SSCRA. I won't go into that again as I posted my opinions on that before. Suffice it to say that you are not reporting derogatory credit solely because they are protected under the Act.

At best, checks presented while the person is protected under the Act that were written before coming under the Act are the only ones that may have fee implications. And the decision to pay or not pay the items cannot be based on active duty status.

------------------
Andy Zavoina
Opinions stated are not necessarily that of my employer.

_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#8768 - 01/12/02 08:52 PM Re: SSCRA & OD checking acct
Bear Collector, CRCM Offline
Diamond Poster
Bear Collector, CRCM
Joined: Nov 2000
Posts: 1,830
District of Columbia
Andy,
What I stated above is our bank's policy, and the way we have chosen to interpret the law. I agree that overdrafts on a DDA after the person has been called to active duty would not fall under SSCRA, and it is unlikely that we would pay an overdraft for that reason. We established a GL for reversed OD fees because IF someone claims that they are in trouble because of their reduction in income, we wanted to be able to at least reverse the fees and not have it count against the branches. (We have very strict rules about fee reversals).

The Act also states that a person may be asked to establish proof that they are "materially affected" by their duty status. Because we are a community bank, we decided not to ask for that proof, but to extend the protections to anyone who applies.
You are in a different position, because you are located very near an military base and therefore much more likely to be impacted than we are. I can understand why your would interpret this act more strictly than we do.
Leslie

[This message has been edited by Leslie (edited 01-12-2002).]

_________________________
Being kind is more important than being important.

Return to Top

Moderator:  Andy_Z