Hi, all

we received a request for SCRA protection from a borrower today. I am not quite sure how to approach being that it seems to be different circumstances.

Premise: customer was active duty in 2005 when he got a loan through us. Since then he got OUT of the military and went into civilian life. However, he missed the military and went back into the reserves. He has since been called to active duty and is applying for SCRA protections.

Does he qualify for them since technically he got the loans prior to being on active duty? I looked through the reg, but it didn't seem to contemplate that.

Any thoughts anybody can share?

thanks in advance

He was active when he got the loan, got it, and came back in, am I understanding the timing? Then no, he isn't eligible and I base this on a court case, Wells v Sibert, https://law.justia.com/cases/federal/district-courts/virginia/vaedce/3:2014cv00737/309990/76/ Review and see if your case is similar to these facts, less the foreclosure.
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Andy- would you agree the Sibert case would not apply for a true reservist though? I am talking about a guy who is member of the Marine reserve (not the National Guard) who gets called up for annual training (active duty) and invokes the 6% each year on his mortgage. We can't so no because annual training is active duty, per the definition, right? I swear in one of your webinars there was discussion on the annual training topic but I can't find my notes!

The two weeks of annual training for the National Guard does not meet the definition of Military Service under the Act. It has to be more than 30 consecutive days under a call to active service authorized by the President or the Secretary of Defense. Annual training for a Marine Reservist however would be covered.

Thanks Randy! The concern of the line is he keeps submitting this every other year (because it is a mortgage loan and he gets the 1 year extension). I think this is a loophole and, honestly, I don't see the big deal since mortgage rates are currently under 6% anyway, but I have to answer the question. So ultimately, he can do what he is doing, right? (He is a Marine reserve)

I am the only one I've heard bring this up, and it is not the intent of the SCRA, but the SCRA has been modified perhaps to the point of unintended consequences. So let's discuss this here, just between us.

"Military service" is defined by 10 USC 101, https://www.law.cornell.edu/uscode/text/10/101 and it includes annual training duty. So a reservist going to summer camp is in the military service.

The national guard member has the "for a period of more than 30 days" that Randy mentioned, BUT 3917 which is about a reservist being called up has no such reference and says the reservist is protected as of the date they get their orders until discharged (2 weeks in this scenario, right?) They are immediately protected under subsections I, II and III of the SCRA which includes the 6% rule. Not only the 6% rule, but the added protection that extends for a year after active duty on mortgage loans. This could effectively extend a mortgage rate decrease until the next year's summer camp. Sounds like shampooing your hair, rinse and repeat.
https://www.bankersonline.com/regulations/scra-3917 and (3937(a)(2) ) https://www.bankersonline.com/regulations/scra-527 .

I've questioned this for some time and don't see why it doesn't apply.

I had thought I found a definition that clarified this before, but now I am not seeing it.

"BUT 3917 which is about a reservist being called up has no such reference"

Actually, it says:

3917 (a) Reserves ordered to report for military service

A member of a reserve component who is ordered to report for "military service" is entitled to the rights and protections of this subchapter.........

Report for "military service" is the key. See 3911(2)(a)(ii).

Anyone know if the 2 weeks duty is considered "voluntary" and is inactive duty training?

(7) The term “inactive-duty training” means—
(A) duty prescribed for Reserves by the Secretary concerned under section 206 of title 37 or any other provision of law; and
(B) special additional duties authorized for Reserves by an authority designated by the Secretary concerned and performed by them on a voluntary basis in connection with the prescribed training or maintenance activities of the units to which they are assigned.
Such term includes those duties when performed by Reserves in their status as members of the National Guard.


https://www.law.cornell.edu/uscode/text/10/101

3911(2)(a)(ii) addresses the National Guard. The Reserves and NG are separate. When the NG is called up, if under the governor, they're not protected, but if called up by the president they are.

This is all great information. Thanks very much, everybody.

Andy: the court case confirmed what I was leaning towards as an answer.

thanks again!