The Court Tells Me I Need A Military Affidavit – Now What?

Apr 13 2014
Categories: SCRA - General

need a military affidavitIt happens every day, all over the country.  A Plaintiff files suit.  The Defendant doesn’t show up and then the Clerk throws a road block at the Plaintiff.  No default judgment may be entered until the Plaintiff produces an affidavit.  The Clerk explains that a federal statute, the Servicemembers Civil Relief Act (“SCRA”) is designed to protect active duty servicemembers and prohibits the Clerk from entering judgment without the affidavit.  The affidavit basically says that a diligent search has been conducted and that the Defendant is not on active military duty or otherwise protected by the Act. You need a military affidavit.

               This affidavit goes by different names, depending upon the particular court:

  • Military affidavit
  • Affidavit of Military Service
  • Non-military affidavit
  • Affidavit in compliance with the Servicemembers Civil Relief Act

 There are easy, valuable, and inexpensive resources available to the Plaintiff.   The first step is to conduct a reliable military verification.  The Servicemembers Civil Relief Act Centralized Verification Service (“SCRACVS”) is a complete and secure on-line tool for compliance.   While some resources, such as the Defense Department’s Department Manpower Data Center (“DMDC”) will give a less-than-satisfactory response unless the Defendant’s social security number is provided, this is usually not an obstacle for the SCRACVS.  A social security number is not usually required.   In lieu of a social security number, the Plaintiff can provide other information about the Defendant, such as:


  • Known relatives or associates
  • Telephone numbers
  • Automobile VIN numbers
  • Business information (although residential addresses are preferable)

Military verifications are usually delivered by the following business day.  Once the military verification has been conducted, the results have to be delivered to the court.  The SCRACVS can prepare and deliver the military affidavit to you overnight for delivery to the Court.  Alternatively, if acceptable to the court, you could sign your own affidavit attesting to the search that was conducted and the results.

 After the Court receives and approves the affidavit, and the affidavit clearly states that the Defendant is not on active military duty,  and other local requirements have been complied with, a default judgment may be entered against the Defendant.

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Mass. Law: Notice Shifts Burden from Servicemembers To Lender

Apr 13 2014
Categories: Legislative Developments

shifts burdenThe Servicemembers Civil Relief Act (“SCRA”) generally requires that, for a Servicemember to be protected by the provisions of the SCRA, the servicemember must affirmatively send a notice to lenders.  A provision in the SCRA that shifts burden to the lender regarding notice does not exist.

The SCRA, at 50 U.S.C. App. § 533, provides certain protections in the context of residential foreclosures. One of those protections is a usually a moratorium on foreclosures if the loan predates the Active Duty Start Date.  The length of this foreclosure not only includes the period of active duty, but a period after the Active Duty End Date.

The length of the extension period has changed over time. Originally, it read “90 days”. On July 30, 2008, it was changed to “9 months” by P.L. 110-289 (and that was to sunset on December 31, 2012). “One year” was inserted by P.L. 112-145 (and that is to sunset on December 31, 2014 at which time the period will revert to “90 days” absent further legislation).

Massachusetts, for one, has added additional protections.  2012 Mass. Acts, c. 108, § 15, added the following new subsection (e) to G.L. c. 188, § 5.

(e)       The declaration of homestead shall recite whether the owner, the owner’s spouse or other family member to be benefitted is a servicemember who may be subject to protection under the Servicemembers Civil Relief Act, 50 U.S.C. app. § 533, should that owner, spouse or family member be called to active duty. A failure to include a recital as to servicemember status shall not affect the validity or enforceability of the declaration and the rights created thereunder.

The legislative concern apparently addressed by the new legislation was that the SCRA puts the onus upon servicemembers to alert lenders and invoke the rights under the SCRA, whereas the Massachusetts legislature wanted to shift the burden to the lender to prove that that individual does not enjoy those protections.  Even when the servicemember had sent proper notice to the bank, there was evidence that the  financial institutions’ subsidiaries and servicers often claimed that they had not received the servicemembers’ notifications.  Such formed part of the basis of allegations against Saxon Mortgage Services, Inc., which was a subsidiary of Morgan Stanley and Bank of America which resulted in a large monetary.

The new statute imputes to the lenders actual notice of active duty, obviating the need for the servicemember to issue his/her own notice to invoke the rights under the SCRA. As the law shifts the burden to the lender’s additional due diligence must be undertaken during active duty verification and prior to execution of a military affidavit to determine whether an individual is covered by the SCRA.


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Who is protected by the Servicemembers Civil Relief Act?

Mar 26 2014
Categories: SCRA - General

Who is protected by the servicemembers civil relief act?An analysis of the US Code identifies who is protected by the Servicemembers Civil Relief Act.  Active military members (including reservists, National Guardsmen, commissioned officers of the Public Health Service and of the National Oceanic and Atmospheric Administration who are in active federal service). Dependents of these people are eligible for some of the benefits of the Act.

“Active duty” for armed services is defined in 10 U.S.C. § 101(d)(1) as “fulltime duty in the active military service of the United States … [including] full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned.” “Active military service” is not further defined in Section 101 of Title 10, U.S. Code, although active service is given the meaning service on active duty or full-time National Guard duty in Section 101(d)(3).

Also, see FAQ on Call-Up to Active Duty for other relevant information.

Under the SCRA, persons on active duty and attending a service school are protected by the Servicemembers Civil Relief Act, while persons attending training prior to entering active duty, such as officer candidates, may not be covered. It is unclear, for example, whether “active military service” under 10 U.S.C. § 101(d) covers training as a member of the Reserve Officer Training Corps or attendance at a military academy. “Dependent” is defined as a servicemember’s spouse or child (as defined for purposes of veterans benefits, in 38 U.S.C. Section 101, or another individual for whom the servicemember provided more than one half of the support in the 180 days prior to an application for relief under the act. This language appears to codify courts’ treatment of the term “dependent” as relating to financial dependency rather than strict familial relationships. 38 U.S.C. Section 101(4) defines child as a person who is unmarried and under the age of eighteen; who before attaining the age of eighteen became permanently incapable of self-support; or who after attaining the age of eighteen and until completion of education or training (but not after attaining the age of twenty-three) is pursuing a course of instruction at an approved educational institution; and who is a legitimate child, a legally adopted child, a stepchild who is a member of a veteran’s household or was a member at the time of the veteran’s death, or an illegitimate child but, as to the alleged father, only if acknowledged in writing signed by him, or if he has been judicially ordered to contribute to the child’s support or has been, before his death, judicially decreed the father of such child, or if he is otherwise shown by evidence to be the father of the said child.

“Military Service” is defined in the Servicemembers Civil Relief Act at 50 U.S.C. App. 511 (2) as follows:

(2) Military service

The term “military service” means—
(A) in the case of a servicemember who is a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard—

(i) active duty, as defined in section 101(d)(1) of title 10, United States Code [see above], and
(ii) in the case of a member of the National Guard, includes service under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under        section 502(f) of title 32, United States Code, for purposes of responding to a national emergency declared by the President and supported by Federal funds (note that the DMDC does not report periods of service that are less than 30 days in duration);

(B) in the case of a servicemember who is a commissioned officer of the Public Health Service or the National Oceanic and Atmospheric Administration, active service; and

(C) any period during which a servicemember is absent from duty on account of sickness, wounds, leave, or other lawful cause.

“Military service” is mentioned in 10 U.S.C. § 101(d)(1), but not actually defined in that Title.

Note that some protections extend for a period of time AFTER active military duty (i.e. the 6% interest rate cap and proscriptions against foreclosure extend after the Active Duty End Date).

Before courts will enter judgments, plaintiffs will need to order an active duty verification, and usually submit an affidavit of military service attesting to the results of that verification.

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Re-enlistment Does Not Restart SCRA Protections

Feb 25 2014
Categories: News

re-enlistment Section 527 of the Servicemembers Civil Relief Act (“SCRA”) generally requires that interest rates on obligations that pre-date active duty be rolled back to 6% upon request of the servicemember and adequate demonstration that the servicemember is eligible for this and other protections.  Other protections deal with foreclosure proceedings, insurance, and default judgments in court.  The logic behind this benefit is that, after a servicemember is called to duty, his income may be reduced and the reduction in interest rate is to soften the financial impact upon the servicemember and his family.   A lender has a right to ask the court to determine that, notwithstanding the new military service, the servicemember has not been disadvantaged to the point where he merits the reduction to 6%.  Such might be the case if the servicemember is particularly wealthy, has other sources of income, or is at a particularly high grade level.

The operative point in time is either the date of the call-up orders or the Active Duty Start Date.   In effect, if military service starts, interest on pre-existing debts can be rolled back.  It stands to reason that, if the military service continues, because of re-enlistment, the operative point in time has not changed.  One cannot restart the clock by simply re-enlisting.

False rumors on the internet are lulling servicemembers (and even some lenders) into believing that a claim can be submitted based on the sole criterion that the servicemember recently re-enlisted.

Unless there is a break in service, the operative point in time does not change – it remains the first date of active duty.  Re-enlistment does not give the servicemember a “second bite at the apple” to incur a debt, only to have the interest rate forcefully reduced shortly thereafter.

If a claim by a servicemembers for benefits under the SCRA is false, and such is a knowing misrepresentation could constitute a violation of the Uniform Code of Military Justice.

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Many Military Borrowers Not Taking Advantage of SCRA Benefits

Feb 24 2014
Categories: News

scra benefitsIn a report issued by the U.S. General Accounting Office, it examined the circumstances under which active duty personnel are taking advantage of the provisions of the Servicemembers Civil Relief Act (“SCRA”) which limit the cap on mortgage interest rates on mortgages taken out before entry into active military service.  The conclusion raised by the report is that SCRA-eligible individuals are not taking advantage of their SCRA benefits. The GAO recommended that there be more outreach to SCRA-eligible borrowers to educate them about the protections afforded under the SCRA and how to request those protections.

The report focused on three large servicers of mortgages as well as a credit union.  It is interesting to note that the GAO found it difficult, if not impossible, to report on the effectiveness of the SCRA benefits because the lenders do not appear to be collecting the data that would be important, such as whether the borrower is on active duty, date of entry, date of termination of duty.  But, for those servicemembers that were identified as SCRA-eligible, the delinquency rate was higher at 16-20% than other borrowers whose eligibility was undetermined  (at 4-8%). The credit union, however had a significantly lower rate of delinquency at less than 1%.

Protections against foreclosure extend beyond the termination date of active military duty (See 50 U.S.C. App 533(b) ). Under current law, that period is 1 year, but it is scheduled to be reduced to 90 days effective December 31, 2014.   The GAO interpreted some data as indicating that the likelihood of delinquency goes up during the year immediately after the Active Duty Termination Date.

Based upon the GAO report, we can anticipate regulations to be issued that would standardize the reporting requirements of lenders and services so that future reviews can more accurately identify needs for education as well as compliance with the SCRA. The promising elements of the report confirm that the lenders and servicers are becoming more aware of the provisions of the SCRA and are responding by making it easier for servicemembers to apply for SCRA benefits.


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SCRA Violation: Attempt to Collect Fees on Aborted Foreclosure

Feb 21 2014
Categories: Court Cases

SCRA violationIn Brewster v. Sun Trust Mortgage Inc.,   No. 12-56560, ___ F.3d ___ (9th Cir., Feb. 7, 2014) , the U.S. Court of Appeals for the Ninth Circuit reversed and remanded a case wherein two foreclosure proceedings were instituted.  The first of the two proceedings imposed charges and fees that covered a five-month period during with the borrower was on active military duty and subject to the protections of the Servicemembers Civil Relief Act (“SCRA”).   The SCRA is quite specific at Section 533(c)  where is prohibits  “”sale, foreclosure, or seizure of property for a breach of [a mortgage that originated before the servicemember's military service]…if made during, or within one year after, the period of the servicemember’s military service”.

The only time a lender is permitted to institute or continue such a proceeding is when a court has given specific approval.

The lender filed the requisite affidavit of military status after having conducted its active duty verification, but then  discontinued the first foreclosure. Later, after the borrower had left military service, a year had transpired thereafter, and the borrower was no longer covered by the protections of the SCRA, a successor servicer instituted a foreclosure and included some fees that had incurred during the first, aborted foreclosure.

Even though, after the filing of the law suit, the second servicer agreed the disputed fees, the Brewster court found that the attempt to collect these fees constituted an SCRA violation.

“[The removal of the fees]   does not impact the analysis of whether or not the SCRA was violated in the first place, because we hold that the attempted collection of fees incident to a Notice of Default was itself a part of the foreclosure proceedings barred by the SCRA. 50 U.S.C.” Brewster, f.n.2.

The lender argued that the “foreclosure” referenced in Section 533(c) should refer to only the second proceeding and not to actions of its predecessor and that there had been no “foreclosure” in the first instance, because title did not pass at a foreclosure auction or similar event.  The Court rejected that analysis for two reasons.  First the Court found that, under a plain reading of the statute, “foreclosure” is not to be construed narrowly as the actual sale of a property (which did not occur in the first instance), but refers to the entire process, as opposed to a specific act, and includes statutory steps.

Second, the court held that language of the statute specifically bars a “’sale, foreclosure, or seizure of property’ thereby suggesting that foreclosure must mean more than just a sale or seizure. 50 U.S. app. § 533(c); Spencer Enters., Inc.v. United States, 345 F.3d 683, 691 (9th Cir. 2003) (noting the “cardinal rule of statutory interpretation that no provision should be construed to be entirely redundant.”). We must move beyond the statute’s explicit terms to determine exactly what the word “foreclosure” encompasses, in addition to the sale or seizure that conclude the foreclosure proceedings.”

The Court did not address the issue of punitive damages collectible under §597(a) when there has been an SCRA violation, but left open that issue upon remand.



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AMEX Supports Servicemembers With Expanded SCRA Benefits

Feb 20 2014
Categories: News

American Express

While the Servicemembers Civil Relief Act provides for waiver of interest and other benefits to servicemembers on active duty, American Express has taken social responsibility to a new level by waiving all credit card annual membership fees for active duty military service personnel.  The SCRA benefits are offered through various products including the Platinum card (which otherwise incurs a $450 fee), Blue Cash Preferred card (a $75 fee), Premier Rewards Gold card (a $175 fee), and others. Amex also waives late payment, over limit, returned check charges and statement copy charges.

Below is the text of an email Amex sent in response to inquiries about their program:

“To support the men and women who serve in the United States Armed Forces, we are handling your account referenced above in accordance with the Servicemembers Civil Relief Act.

The Servicemembers Civil Relief Act provides for a maximum annual interest rate of 6% per year on loans you received before starting active military duty. As of today, your account does not have a balance owed which generates interest charges so there is no eligible balance. However, we’ve credited your account for any applicable fees and previously billed interest if applicable, which you’ll see reflected on an upcoming billing statement(s). Additionally, we have waived the following fees on the account for the duration of your active military duty:

  • Annual Membership fees
  • Overlimit fees
  • Late Payment fees
  • Returned Payment fees
  • Statement Copy Request fees

This completes our review of this account, if there are any additional accounts you would like reviewed for Servicemembers Civil Relief Act benefits, please call us at 1-800-253-1720. If you’re outside the United States, call us collect at 1-336-393-1111.

We are grateful for the service and devotion you have shown to our country.

American Express Customer Service”

American Express is showing their support for our active military members with these expanded SCRA benefits. We hope consumers can follow their lead by supporting the card.

Visit Yahoo Finance for additional information on credit card SCRA benefits.




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Automobile Leases Under SCRA – Capitalized Cost Reduction Refundable

Jan 22 2014
Categories: Court Cases

Capitalized Cost ReductionThe Servicemembers Civil Relief Act (“SCRA”) provides certain protections for servicemembers in active duty.  Among those protections is the ability to terminate car leases dated before the servicemember enters active military duty (See 50 U.S.C. App 535).

The SCRA provides that, if a servicemember takes advantage of the option to terminate a car lease, the dealer or lender may not impose an early termination penalty.  Further, if the servicemember has paid any money in advance for a period that the servicemember is in active duty, that amount must be refunded to the servicemember.

Inherent in most car leases is a capitalized cost reduction (“CCR”).  To determine the amount that the dealership will charge the customer the dealer first calculates the sales price of the car.  The dealer then determines how much the car will be worth at the end of the lease (the  CCR) and deducts that amount from the original sales price.  The difference is the cost to the customer (plus interest).

In  Durm-Honda  the plaintiff was a member of the United States Army Reserve when he entered into a car lease with Honda.  He was subsequently called up to active duty for not less than 180 days and he elected to terminate his car lease.   He maintained that part of the CCR should be returned to him because it was a form of lease payment that the SCRA says is to be refunded for any period after the termination of the lease.  There was no reason, he maintained, that the dealership should collect a windfall because the lease was terminated early – in advance of the date that determined the CCR.  The plaintiff’s action was in the form of a class action for violations of the SCRA and claims under Maryland law for conversion and unjust enrichment. 

Honda, on the other hand, filed a motion to dismiss, claiming that no refund of the CCR was in order because it was in the nature of a down payment and  it was not paid after the lease termination date.

The Court denied Honda’ motion in large part and allowed most of the servicemember’s claims to proceed finding that the SCRA  “requires the lessor to refund lease amounts that were ‘for’ the time after the lease terminated, not lease amounts ‘due after’ termination.”   Certain of the servicemembers claims were dismissed.  The Court held that the state claims for conversion and unjust enrichment could not proceed because the claims were not based upon contract but upon violations of the SCRA, a federal statute.  The non-dismissed claims will now proceed to trial. 



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