Effective Date of Rate Reduction

Help! We just had a customer notify us of active duty, which was in August, 2004, 6 payments ago. Do we effective date our rate on the date of notification or back to August, 2004, the date of active duty?

207.(b)(2)LIMITATION EFFECTIVE AS OF DATE OF ORDER TO ACTIVE DUTY
Upon receipt of written notice and a copy of orders calling a servicemember to military service, the creditor shall treat the debt in accordance with subsection (a), effective as of the date on which the servicemember IS called to military service.

Not to use Bill Clinton's terminology, but it depends on your definition of the word "is". My grammatical knowledge in this instance implies that "is" in the future and also implies that the creditor received the written notice before the service member went active. Otherwise, wouldn't the reg read ".. was called to military service."?

Having said that, I believe you are better off to effective date the transaction back to August of 2004. Six months of lost interest above 6% is not worth the hassle (both public and legal) that a bank could face.

Thank you very much for the help. I agree with you. The loss of income is second to doing the right thing in the customer's favor. Again, thanks!

DM is correct. You will back date it. In fact, the SM has up to 180 days AFTER discharge to come back to you and invoke their rights. One key element is when their coverage actually started. The definition can vary. In simple terms, if I were called to active duty today, receiving my orders today and reporting in a month, I would be covered under SCRA today. If I went and saw my recruiter and enlisted today, reporting for duty in a month, I would be covered in a month. That will help you gauge the effective date and where you start your reamortization.

Just to clarify this in my mind...we use the date they are CALLED to active duty, NOT the date they are to REPORT to active duty??

This is true for the reservists activated. It isn't the case for the person walking into the recruiters office and enlisting.

Thanks Andy.

Okay, I actually just read the "orders" line by line instead of just looking at the dates and it says "You enter active duty upon reporting to unit home station". That changes everything that's been said doesn't it?

By the way, this was for a reservist.