Violators of the Servicemembers Civil Relief Act beware: The Department of Justice, ever a formidable foe, has begun relentlessly increasing its vigilance over SCRA violations, filing lawsuits from coast to coast that cost millions to settle.
Targets include banks, moneylenders, financial institutions, storage facility operators, landlords/housing corporations and more.
When you’re representing a client from one of these industries, it’s imperative that you know the ins and outs of the SCRA and follow the rules scrupulously, lest you be next on the list.
What is the SCRA?
The SCRA was enacted to help protect active-duty military personnel from legal actions taken against them while they are deployed and unable to effectively respond.
The act prohibits many actions against deployed military personnel. These include evictions, foreclosures, repossessions and placing liens on property, unless a court order is secured before proceeding.
Those who have regular financial dealings with military members must step up their SCRA adherence.
Vigilance Over SCRA Violations Focused on Banks, Lenders
The DOJ has targeted financial institutions especially for violations. Any bank or mortgage company that places a lien or begins foreclosure proceedings against an active-duty military member in arrears on his or her mortgage is risking invoking the DOJ’s wrath. Lenders have paid fines for evicting servicemembers who fall behind on their mortgages while deployed.
Likewise, if these lenders hold the notes on other types of loans such as those for vehicles, college tuition or even personal loans, they are subject to fines and making restitution for violations.
The government also prohibits moneylenders from charging servicemembers more than 6 percent interest on loans. Excessive interest on student loans in particular has prompted the DOJ to file lawsuits on behalf of many servicemembers. The DOJ has also targeted other lending institutions for improperly repossessing servicemembers’ vehicles.
Do Your Homework, Save Money
In the end, the courts and the DOJ have the last word. This can cost lenders, banks and other businesses thousands, if not millions of dollars.
Those who do business with servicemembers must find out their active-duty status before filing a claim against them. Timing can play a big part in the outcome and complex rules govern the process. Examples include when the servicemember went on active duty relative to signing a contract, taking out a loan, etc. If the borrower is a reservist, this complicates matters further.
Some companies depend on the DMDC to verify whether their clients are on active duty. But others find it easier and more reliable to use a third-party agency. One of the biggest benefits of going this route is the agency can get results without a Social Security number. Another is the option of getting an affidavit to bring to court, which is required in some jurisdictions.
Those on the other side of the table — the servicemembers themselves — have a new weapon in their arsenal as well. The DOJ recently launched the Servicemembers Civil Relief Act Enforcement Support Pilot Program to help servicemembers fight actions like the ones mentioned above, once they return home. The DOJ will fund assistant U.S. attorneys and trial lawyers to help military personnel lodge complaints against offending entities. They’ll also help defend them in cases creditors have already brought to court.
The pilot program will run through fiscal 2018, and rollout will begin in areas with heavier military presences. Washington and North Carolina will be first.
Whether you’re representing plaintiff or defendant, thoroughly inform yourself regarding this federal statute and any state or local amendments, and have the paperwork to back up your claims.