When does the SCRA allow foreclosure and when does it not?
An excellent law article addresses common misconceptions about the Servicemembers Civil Relief Act and the reporting of the DMDC.
SCRA foreclosures against servicemembers on active military duty are not always prohibited. Creditors must obtain a court order to move forward with a foreclosure on a servicemember who undertook the obligation before going on active duty (this article does not address requirements under the Military Lending Act which may govern loans taken out after a servicemember enters active duty).
SCRA Foreclosure Rules
The SCRA is unclear about whether it is the servicemember’s job to inform creditors of their active-duty status or if the onus is on the creditor to determine military status.
The murkiness of this law will not protect creditors in court, however. Many settlements between lenders and the Department of Justice shift the duty to the lenders to determine military status. Those lenders often engage the Servicemembers Civil Relief Act Centralized Verification Service to do single or SCRA batch verifications of borrowers in the lender’s database.
National Guardsmen and reservists fall under a separate set of guidelines, as do cases involving dependents and family members of servicemembers.
Creditors should review the particular SCRA state statute, its proscriptions and permitted acts, rather than assuming that active-duty service is an automatic roadblock to all enforcement action.
Servicemembers, on the other hand, should note that certain rights depend upon the servicemember invoking them and the timing of when a debt or obligation was incurred (before or after the active-duty start date). The SCRA does not cover certain obligations (e.g., those servicemembers undertook before active duty). Thus, under certain circumstances, a judicial foreclosure may proceed when a non-judicial foreclosure might otherwise be barred.
Military Affidavits and SCRA Foreclosures
Regardless, an SCRA foreclosure undergoes an added degree of judicial scrutiny. The military affidavit will have to be clear and persuasive. The court will require strict proof of compliance with the SCRA.
Depend on the SCRACVS for all your military status verifications. Our service is fast, accurate and cost-effective, and it is essential when creditors don’t know the borrower’s Social Security number. In these instances, DMDC verifications come with a disclaimer saying the information in the certificate may not be relied upon.
We are also an excellent source of invaluable information for those doing business with military members. For instance, it’s important to stay aware of how long after termination of active duty the prohibition of foreclosure lasts. The allotted time has gone back and forth over the years. It is currently one year; however, it is will go back to 90 days as of Jan. 1, 2020, absent an amendment or revision. Trust SCRACVS to bring you the most updated information to help you stay in compliance with the SCRA.