You Can't Handle The Truth: Fact, Fiction and the Servicemembers Civil Relief Act

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Compliance with the Servicemembers Civil Relief Act, 50 USC app. §§501 is essential in light of recent SCRA settlements including large monetary penalties and ongoing compliance monitoring. In this article, published in Westlaw Journal Bank & Lender Liability (reprinted with permission from Vol. 18, Issue 12), attorneys Kirk Jensen, Donna Wilson and Sasha Leonhardt of BuckleySandler LLP review several commonly held fictions about SCRA and correct them. For example, it is fiction that the SCRA prevents all foreclosures against servicemembers. SCRA Section 533 does grant service members substantial foreclosure-related protections, but does not prohibit foreclosures. A similar fiction exists concerning negative credit reporting while a service member is on active duty. However, creditors are entitled to report the service member's failure to make payments while on active duty, but they may not penalize borrowers for seeking or receiving benefits under the SCRA. These and other issues are clarified by this article, which should serve as a wake-up call to lenders and servicers potentially facing SCRA enforcement and litigation.

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