The Civil Rights Division of the Department of Justice, created in 1957 by the enactment of the Civil Rights Act of 1957, works to uphold the civil and constitutional rights of all Americans, particularly some of the most vulnerable members of our society. See Civil Rights Division. As part of this work, the Civil Rights Division is tasked with enforcing the Servicemembers Civil Relief Act (“SCRA”), 50 U.S.C. §§ 3901-4043. See id. at Housing and Civil Enforcement Section.
The SCRA, enacted in 2003 and amended several times since then, revised and expanded the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA), a law designed to ease financial burdens on servicemembers during periods of military service. See 50 U.S.C. §§ 3901-4043. The SCRA is a federal law that provides protections for military members as they enter active duty. See id. It covers issues such as rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments. See id.
The location of the SCRA within the United States Code changed in late 2015. Previously found at (codified and cited as) 50 U.S.C. App. §§ 501-597b, there was an editorial reclassification of the SCRA by the Office of the Law Revision Counsel of the United States House of Representatives that became effective on December 1, 2015. The SCRA is now found at (codified as) 50 U.S.C. §§ 3901-4043.
“[T]he Act [SCRA] must be read with an eye friendly to those who dropped their affairs to answer their country’s call.” Le Maistre v. Leffers, 333 U.S. 1, 6 (1948) (citing Boone v. Lightner, 319 U.S. 561, 575 (1943)). Restated, the SCRA should generally be read in favor of the servicemembers it is intended to protect. See id.
Under the SCRA, the Attorney General is authorized to file a federal lawsuit against any person (or entity) who engages in a pattern or practice of violating this law. 50 U.S.C. § 4041(a)(1). The Attorney General may also file such a suit where the facts at hand raise "an issue of significant public importance.” Id. at § 4041(a)(2). When the Attorney General files a lawsuit under the SCRA, he has the authority to seek monetary damages on behalf of individual servicemembers. Id. at § 4041(b)(2). The Attorney General also has the authority to seek civil penalties, equitable relief, and declaratory relief. Id. at § 4041(b).
In order to have an individual SCRA case reviewed by the Department of Justice, non-attorneys must first seek the assistance of a military legal assistance office. See Housing and Civil Enforcement Section. If that office cannot resolve the complaint, it may choose to forward the complaint to the Department. See id. The Department then will review the matter to determine whether action by the United States is appropriate. See id.
The SCRA provides a wide range of benefits and protections to those in military service. See 50 U.S.C. §§ 3901-4043. Military service is defined under the SCRA as including: 1) full-time active duty members of the five military branches (Army, Navy, Air Force, Marine Corps and Coast Guard); 2) Reservists on federal active duty; and 3) members of the National Guard on federal orders for a period of more than 30 days. Id. at § 3911(2). Servicemembers absent from duty for a lawful cause or because of sickness, wounds or leave are covered by the SCRA. Id. at § 3911(2)(C). Commissioned officers in active service of the Public Health Service (PHS) or the National Oceanic and Atmospheric Administration (NOAA) are also covered by the SCRA. Id. at § 3911(2)(B).
The SCRA also provides certain benefits and protections to servicemember dependents, see, e.g., 50 U.S.C. § 3955, and, in certain instances, to those who co-signed a loan for, or took out a loan with, a servicemember. See id. at § 3913. The term “dependent” includes a servicemember’s spouse, children, and any other person for whom the servicemember has provided more than half of their financial support for the past 180 days. Id. at § 3911(4). For most servicemembers, SCRA protections begin on the date they enter active duty military service. See 50 U.S.C. § 3911(3). For military reservists, protections begin upon the receipt of certain military orders. Id. at § 3917(a).
Specific Benefits And Protections
Below you will find a description of those SCRA benefits and protections that trigger the most questions received by the Department of Justice. For questions involving areas of the SCRA not addressed below, please feel free to contact us.
Benefit and Protection No. 1 – The six percent interest rate cap. 50 U.S.C. § 3937
The SCRA’s benefits and protections include a six percent interest rate cap on financial obligations that were incurred prior to military service, 50 U.S.C. § 3937; the ability to stay civil court proceedings, id. at § 3932; protections in connection with default judgments, id.; protections in connection with residential (apartment) lease terminations, id. at § 3955; and protections in connection with evictions, mortgage foreclosures, and installment contracts such as car loans. Id. at §§ 3931, 51, 53, 55-56.
The SCRA limits the amount of interest that may be charged on certain financial obligations that were incurred prior to military service to no more than six percent per year, including most fees. 50 U.S.C. § 3937(a)(1) & (d)(1). In order to have the interest rate on a financial obligation such as a credit card or a mortgage capped at six percent per year, a servicemember must provide the creditor with a copy of his or her military orders and a written notice. Id. at § 3937(b)(1). The written notice and military orders must be provided to creditor within 180 days of the end of the servicemember’s military service. Id.
In response, a creditor must forgive – not defer – interest greater than six percent per year. See 50 U.S.C. § 3937(a)(2). The creditor must forgive this interest retroactively. See id. at § 3937(a)(1) & (b)(2). The creditor is also prohibited from accelerating the payment of principal in response to a properly made request for a six percent interest rate cap. Id. at § 3937(a)(3).
For mortgages, interest is capped at six percent during the entire period of military service and for one year after the period of military service. 50 U.S.C. § 3937(a)(1)(A). For all other obligations, interest is capped at six percent only for the duration of the period of military service. Id. at § 3937(a)(1)(B).
A hypothetical under Section 3937 of the SCRA, 50 U.S.C. § 3937: John Doe takes out a mortgage and then enters military service. Captain John Doe is in military service continuously for 20 years. Captain Doe retires from military service and on the 179th day of his retirement asks that the interest rate on his mortgage be lowered to six percent per year. Captain Doe provides his creditor with a written notice and a copy of all of his military orders. The creditor must forgive the entire 20 years of interest that was at a rate greater than six percent – inclusive of fees – and an additional year of interest going forward. See, generally, 50 U.S.C. § 3937.
A creditor may avoid reducing the interest rate to 6 percent per year only when a court determines that the servicemember’s ability to pay interest at rate higher than six percent per year is not “materially affected” by the servicemember’s military service. 50 U.S.C. § 3937(c).
The following types of financial obligations, among others, are currently eligible for the six percent SCRA interest rate benefit: credit cards; automobile, ATV, boat and other vehicle loans; mortgages; home equity loans; and student loans. See, e.g., 50 U.S.C. § 3937(d)(2).
On August 14, 2008, President Bush signed into law the Higher Education Opportunity Act, P.L. 110-315, that, among other things, amended 20 U.S.C. § 1078(d) to make federally guaranteed student loans protected under the SCRA. That means that prior to August 14, 2008, the SCRA did not cover federally guaranteed student loans. So, for federally guaranteed student loans that originated before August 14, 2008, such as student loans that originated under the Federal Family Education Loan (“FFEL”) Program and Direct Loans from the Department of Education, the servicemember borrower is not covered by the SCRA.
A student loan hypothetical under Section 3937 of the SCRA, 50 U.S.C. § 3937: John Doe takes out five private student loans prior to entering into military service. After entering military service, Servicemember Doe consolidates his five loans into one loan. Six months later, he hears about the SCRA’s six percent interest rate cap and requests that the interest rate on his loan be lowered to six percent per year. He sends in a written notice and a copy of his military orders.
Question: Is Servicemember Doe entitled to the six percent interest rate cap?
Answer: Only for the period of time between when he entered military service and when he consolidated his private student loans. Servicemember Doe’s existing student loan originated during a period of military service. See 50 U.S.C. § 3937(a)(1).
Benefit and Protection No. 2 – Protections against default judgments. 50 U.S.C. § 3931.
In any civil court proceeding in which the defendant servicemember does not make an appearance, a plaintiff creditor must file an affidavit with the court stating one of three things: 1) that the defendant is in military service; 2) that the defendant is not in military service; or 3) that the creditor is unable to determine whether or not the defendant is in military service after making a good faith effort to determine the defendant’s military service status. Id. at § 3931(b)(1). This comes up most frequently for the Department of Justice in the context of judicial foreclosure proceedings. [Note: Foreclosures typically proceed in one of two ways, either judicially (through a court process), or non-judicially (without a court’s involvement). The way in which the SCRA treats the two types of foreclosure proceedings is very different, see 50 U.S.C. §§ 3931, 32 & 53, and states typically specify which way foreclosures may proceed within their borders.]
To verify an individual’s military service status, one may search the Department of Defense’s Defense Manpower Data Center (“DMDC”) database. This database may be located online at: https://scra.dmdc.osd.mil/.
The SCRA states that for civil court proceedings where a defendant servicemember has not made an appearance and it seems that he or she is in military service, a court may not enter a default judgment against that defendant until after it appoints an attorney to represent the interests of that defendant servicemember. 50 U.S.C. § 3931(b)(2). The court must stay a civil court proceeding for at least 90 days if that appointed attorney has been unable to contact the defendant servicemember, or if there may be a defense to the action that requires that the defendant be present. Id. at § 3931(d).
Benefit and Protection No. 3 – Non-judicial foreclosures. 50 U.S.C. § 3953.
Section 3953 of the SCRA, 50 U.S.C. § 3953, addresses the topic of mortgages and non-judicial foreclosures. See id. In order for a servicemember to receive the protections of Section 3953 of the SCRA, the “obligation on real or personal property” needs to have been taken out prior to the servicemember entering military service. Id. at § 3953(a)(1).
Under Section 3953 of the SCRA, 50 U.S.C. § 3953, during a period of military service, and for one year after a period of military service (the “tail coverage” period), a creditor must get a court order prior to foreclosing on a mortgage. Id. This is a strict liability section of the SCRA, and a person who knowingly violates this provision may be fined and/or imprisoned for up to one year. Id. at § 3953(d).
The tail coverage period described above has changed over time. The following is a summary of the tail coverage period over the years under 50 U.S.C. § 3953:
- December 19, 2003 to July 29, 2008 – 90 days
- July 30, 2008 to February 1, 2013 – Nine months
- February 2, 2013 to December 31, 2015 – One year
- January 1, 2016 to March 30, 2016 – 90 days. However, on March 31, 2016, the Foreclosure Relief and Extension for Servicemembers Act of 2015 was signed into law. See Foreclosure Relief and Extension for Servicemembers Act of 2015, Pub. L. No. 114-142, 130 Stat. 326 (2016). This extended the tail coverage period for non-judicial foreclosures back to one year, and made this change retroactive to January 1, 2016. See id.
- March 31, 2016 to December 31, 2017 – One year
On December 12, 2017, the President signed into law the National Defense Authorization Act for Fiscal Year 2018, that, inter alia, extended the one year tail coverage period described above through December 31, 2019. See National Defense Authorization Act for Fiscal Year 2018, Pub. L. No. 115-91, § 557.
Courts have the ability under the SCRA, and a duty in certain instances, to stay a non-judicial foreclosure proceeding or adjust the payments, if the servicemember’s ability to meet the obligation is materially affected because of his or her military service. 50 U.S.C. § 3953(b).
Benefit and Protection No. 4 – Installment contracts and repossessions – 50 U.S.C. § 3952.
The SCRA states that a creditor may not repossess a vehicle during a borrower’s period of military service without a court order as long as the servicemember borrower either placed a deposit for the vehicle, or made at least one installment payment on the contract before entering military service. 50 U.S.C. § 3952.
Benefit and Protection No. 5 – Residential (apartment) lease terminations – 50 U.S.C. § 3955.
Section 3955 of the SCRA, 50 U.S.C. § 3955, addresses the topic of lease terminations. With respect to residential apartment leases, the SCRA requires that the premises be occupied (or are intended to be occupied) by a servicemember or a servicemember’s dependent(s). 50 U.S.C. § 3955(b)(1). Additionally, the lease must either be executed by a person who later enters military service, or is in military service and later receives permanent change of station (“PCS”) orders or deployment orders for a period of at least 90 days. Id. at § 3955(a)(1). To terminate a residential lease, the servicemember must submit a written notice and a copy of his or her military orders – or a letter from a commanding officer – by certain methods to the landlord or landlord’s agent. Id. at § 3955(c) & (i)(1). If a servicemember pays rent on a monthly basis, once he or she gives proper notice and a copy of his or her military orders, then the lease will terminate 30 days after the next rent payment is due. 50 U.S.C. § 3955(d)(1).
A lease termination hypothetical under Section 3955 of the SCRA, 50 U.S.C. § 3955: Jane Servicemember receives PCS orders to transfer from Iowa to Texas. She gives her landlord written notice of her intent to terminate her apartment lease and a copy of her PCS orders on September 18th. Her next rent payment is due on October 1st. The effective date of the lease termination will be Halloween – October 31st. See, generally, 50 U.S.C. § 3955.
Department Of Justice Pleadings And Case Information By Topic
Note that the following is taken from: http://www.justice.gov/crt/housing-and-civilenforcement-section-cases-1#sm
- LEASE TERMINATIONS
United States v. BMW Fin. Servs., N.A.
summary complaint (2/22/2018) settlement agreement (2/22/2018) press release (2/22/2018)
Andre Gordon v. Pete's Auto Service of Denbigh, Inc. (4th Cir.)
summary brief for the United States as amicus curiae in support of plaintiff-appellant urging reversal (4/6/10) supplemental brief for the United States as amicus curiae in support of plaintiff-appellant urging reversal (11/29/10) opinion - reversed and remanded (2/14/11)
- LANDLORD/TENANT (NON-PATTERN OR PRACTICE)
United States v. Akhavan (E.D. Va.)
summary complaint consent order press release (9/24/09)
- LANDLORD/TENANT (PATTERN OR PRACTICE)
United States v. Empirian Property Management, Inc. (D. Neb.)
summary complaint consent order press release (3/1/12)
- FINANCIAL INSTITUTION (ENTERPRISE WIDE)
United States v. Capital One, N.A. (E.D. Va.)
summary complaint amended consent order press release (7/26/12)
- FINANCIAL (STUDENT LOANS)
United States v. Sallie Mae, Inc. (D. Del.)
summary complaint (5/13/14) consent order (9/29/14) press release (5/13/13) Attorney General Eric Holder Speaks at Press Conference (5/13/14) press release (5/28/15)
- MORTGAGE FORECLOSURES
United States v. Bank of America Corp., Citibank, NA, JPMorgan Chase & Co., Ally Financial, Inc. and Wells Fargo & Co. (D.D.C.) (Please refer to Exhibit H for the SCRA portion of this settlement)
summary complaint consent judgment with JPMorgan Chase & Co. exhibits press release (2/9/15) press release (9/30/15)
United States v. Northwest Tr. Servs., Inc. (W.D. Wash.)
United States v. Horoy, Inc. d/b/a Across Town Movers (S.D. Cal.)
summary complaint (3/16/15) press release (3/16/15) consent order (5/15/15) press release (5/18/15)
- VEHICLE REPOSSESSIONS
United States v. Santander Consumer USA, Inc. (N.D. Tex.)
summary complaint (2/25/15) consent order (2/26/15) addendum to consent order (3/27/15) press release (2/25/15)
United States v. COPOCO Community Credit Union (E.D. Mich.)
summary complaint (7/26/16) press release (7/26/16) Opinion and Order Denying Defendant’s Motion to Dismiss (1/5/17) response to motion to dismiss (9/19/16) settlement agreement (7/6/17) press release (7/6/17)
United States v. HSBC Finance Corp. (N.D. Ill.)
summary complaint (8/8/16) proposed consent order (8/8/16) press release (8/8/16)
United States v. Wells Fargo Bank, N.A. d/b/a Wells Fargo Dealer Services (C.D. Cal.)
summary complaint (9/29/16) proposed consent order (9/29/16) press release (9/29/16)
United States v. CitiFinancial Credit Co. (N.D. Tex.)
summary complaint (9/18/17) settlement agreement (9/18/17) press release (9/18/17)
United States v. Westlake Services, LLC (C.D. Cal.)
summary complaint (9/27/17) settlement agreement (9/27/17) press release (9/27/17)
A Final Note
Any of the rights and protections provided for in the SCRA may be waived. 50 U.S.C. § 3918(a). For contracts, leases (including apartment leases) and mortgages, all modifications, terminations and cancellations require a written waiver of rights. Id. at § 3918(b). Such written waivers are effective only if executed during or after the relevant period of military service. Id. at § 3918(a). Written waivers must be in at least 12 point font. Id. at § 3918(c). In order to be effective, the written waiver must be its own document. Id. at § 3918(a).