We have a borrower who wants to take advantage of the 6% rate limitation under SCRA. However, the borrower's spouse is currently in active duty. The borrower is the only name on the mortgage and she took the loan out prior to marrying her current spouse who is in the military. She is claiming that the limitation applies to "dependents", however, I believe the SCRA's coverage for dependents covers the Title III, not Title II which includes the rate cap.

does anyone have any contrary information? Does residing in a community property state change anything? I would think not, as she acquired the loan prior to marriage, however, they have both used the home as their primary residence during the marriage and the spouse's income may have been used to make payments. Not sure if SCRA speaks to this or not.

Rose, I don't know for sure, but I don't think that technically this loan would fall under the protections of the law as you are stating the facts -- the law is not this specific. You may want to determine whether the borrower has transferred any interest in the property to the other spouse and whether that has any impact on your decision -- if so, then the collateral that secures the loan would be co-owned by the servicemember. I think residing in a community property state could make a difference if the debt was contracted for after the marriage and the debt was clearly an obligation of the community, even though only one spouse signed the contract documents. You also don't want to make headlines for denying the reduction in rate if a definite answer is questionable.