Spotlight On The SCRA (Part 1 of 3): Increased Enforcement Activity


SCRA Attorney Kirk JensenThe Servicemembers Civil Relief Act (SCRA) is designed to provide protection for military members as they enter active duty. The Act has origins dating back to the Civil War, but was first solidified in 1940 with the passage of the Soldiers and Sailors Civil Relief Act (SSCRA). In 2003, the SSCRA underwent modernizations, but the intent and language remained intact, to become what is known today as the SCRA.

Following the 2009 financial crisis and the rising number of foreclosures, reports began surfacing about banks and other financial institutions violating the SCRA. The Department of Justice began actively pursuing actions against institutions with the Office of the Comptroller of the Currency becoming involved later.

According to Kirk Jensen, Partner in BuckleySandler’s Washington, DC office, there are four milestone events in financial services SCRA enforcement as a result. The first is the foreclosure settlements from 2011 with the DOJ. These are the first settlements to focus on the mortgage industry. Secondly, in April of 2012, the DOJ addressed a wider range of issues with an SCRA component that went beyond the 2011 consent orders. As part of OCC consent orders, 14 residential mortgage servicers and two third-party vendors were required to undergo reviews by independent firms. These reviews are broad in scope including an SCRA component. Finally, in July 2012, the DOJ and the OCC entered into consent orders with another financial institution for SCRA violations. This marks the first time the DOJ or OCC expanded the scope to include auto and credit cards.

“Agencies are acutely focused on the SCRA and it’s vital that companies have the necessary compliance mechanisms in place,” cautions Jensen. “The agencies are interpreting the act very differently than creditors have historically done. The recent enforcement actions demonstrate the agencies have shifted the burden to the creditor in determining if an individual is on active duty.”

Click here to learn more about BuckleySandler’s SCRA practice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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