Servicemembers Civil Relief Act

What is SCRA?

The Servicemembers Civil Relief Act (SCRA) is a federal law providing benefits and protections to individuals engaged in military service so they can focus on their missions without the same amount of financial-related stress as they otherwise might have.

I’ve heard that because of the SCRA, you can’t charge me an interest rate higher than 6%. Is that right?

One of the benefits of SCRA is a 6% interest rate cap on debt incurred prior to Active Duty. The 6% interest rate cap wouldn't apply, however, to a loan you took out while on Active Duty or debt incurred during an Active Duty period. 

Navy Federal Credit Union made the decision to lower the SCRA interest rate cap as a service to our members. Effective April 1, 2022, Navy Federal is adjusting SCRA eligible accounts to 4%, which is a greater benefit than what the federal SCRA requires.

Which members of the military are protected by the SCRA?

The SCRA protects all branches of the U.S. Armed Forces, including the Army, Navy, Marines, Air Force, Coast Guard and Space Force. 

In addition, the SCRA protects:

• Reservists called to Active Duty
• Members of the National Guard called to Active Duty pursuant to U.S. Code Title 10 or called to federal active service for more than 30 consecutive days under U.S. Code Title 32 section 502(f) 
• Commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration engaged in active service
• U.S. citizens who are serving in the armed forces of a U.S. allied nation during the joint prosecution of a war or military action

Who isn't covered by the SCRA?

Some examples:

• Retired military personnel 
• Members of the National Guard who haven't been called to Active Duty or who haven't been called to federal active service for a period of more than 30 consecutive days
• Servicemembers who applied for SCRA, and the request was submitted to Navy Federal greater than 180 days after their last day of Active Duty. As an SCRA requirement, a servicemember must apply no later than 180 days after the last day of Active Duty.

Are all my accounts eligible for SCRA interest rate reductions?

The following accounts are eligible for SCRA protection, provided the debt was incurred before going on Active Duty:

• Consumer loans (such as auto loans and personal loans)
• Credit cards
• Education loans (both federal and privately funded)
• Checking lines of credit
• Mortgages (such as first mortgages, fixed equity and home equity lines of credit)
• Business loans

I took out a loan as a full-time member of the military but before I was deployed overseas. Does my loan qualify for the 6% interest rate cap because of my deployment?

No, the SCRA caps the interest rate for pre-service debt only. SCRA interest rate benefit coverage isn't affected by deployment. Only loans you took out prior to Active Duty are covered by the SCRA.

I’m in the National Guard, and I was called to active service by the governor of my state for a state-related matter. Is the debt I incurred prior to this activation eligible for the 6% rate cap under SCRA?

No, for members of the National Guard, the SCRA extends protections for individuals called to Active Duty under Title 10 of United States Code (i.e., overseas combat) for any period or called to federal active service for more than 30 consecutive days in response to a national emergency or disaster declared by the President and supported by federal funds under Title 32 Section 502(f) of the United States Code. A call to active service by the governor of a state for a state mission that doesn't involve Title 32 Section 502(f) dollars doesn't qualify under the SCRA. 

When you submit your SCRA request, please indicate if you’re also requesting benefits for a specific state. Your request will be reviewed for eligible benefits and protections for both federal SCRA and the state benefits in your request.

I incurred debt during a period of Active Duty, prior to my current Active Duty period. There was even an interruption between these 2 periods of Active Duty. Is the debt in question considered “pre-service” and, therefore, eligible for the SCRA 6% rate cap?

No, if the debt you incurred happened during an Active Duty period, it’s not eligible for SCRA. Only debt incurred during a civilian period, prior to Active Duty, is considered eligible.

I’m deploying and have been on Active Duty for the last several years; will Navy Federal reduce my interest rate?

The SCRA interest rate protection only applies to debts incurred prior to going on Active Duty. Deployments aren't covered by SCRA for purpose of reducing interest rates.

I am on Active Duty in the military, but my spouse isn't. Does the debt my spouse incurred in their name alone before I joined the military qualify for an SCRA rate reduction?

The SCRA protection is available for pre-service debt belonging to the servicemember alone or to the servicemember and a spouse jointly. Debt held by a non-servicemember spouse or non-spouse isn't subject to SCRA coverage. There are certain state laws that provide benefits for spousal coverage, but these laws require a case-by-case analysis. When you submit your SCRA request, please indicate if you're also requesting benefits for a specific state. Your request will be reviewed for eligible benefits and protections for both federal SCRA and the state benefits in your request.

How do I apply?

You must submit a request in writing via:

• an e-message through our mobile app* or online banking 
  
• fax at (703) 206-3108, Attn: SCRA Servicing
• mail at P.O. Box 3302, Merrifield, VA 22119, Attn: SCRA Servicing
• in person at one of our branches

What do I need to include in my written request?

For your convenience, you can submit your request using the  SCRA Benefits Request Form.  You’ll need to include the following information in the form or in a separate written request: 

• Initial Active Duty start date
• Date Active Duty orders were issued
• Branch of service
• Active Duty end date, or indicate if indefinite

An SCRA specialist may reach out for additional documentation. Examples of documentation we may request include:

• Call to Active Duty orders
  
• Recall to Active Duty orders
• Statement of Service (must be signed by Commanding Officer)
• Leave and Earnings Statement
• Certified Letter signed by the Commanding Officer

National Guard or Reservists: please submit military orders indicating you were called to Active Duty along with a written request.

What happens after I submit my request?

Once SCRA Servicing has received your request, your documents will be reviewed for eligibility. If determined to be eligible, we’ll reduce the interest rate on your pre-service debt retroactive to the date that your Active Duty period started (or, if you’re a qualifying Reservist or a member of the National Guard, beginning on the date of the orders). 

Please allow up to 30 days for your request to be processed. 

After receiving SCRA protection, do I still have to make payments?

Yes, the SCRA doesn't relieve servicemembers from the requirement to make timely payments on their loans or accounts. While foreclosure and repossession options are limited by the SCRA in the event of a delinquency, lenders are still permitted to report negative information to credit reporting agencies in the event of a default of payment. 

I’m having trouble making payments due to my military service, even after being granted the SCRA 6% interest rate benefit. Are there any other programs or assistance available?

In circumstances where your military service is impacting your ability to meet your financial commitments with Navy Federal, we encourage you to contact Navy Federal's Personal Finance Management department at 888-503-7102. They’ll work with you on identifying the financial assistance we can provide.

In addition, Fannie Mae, Freddie Mac and the Treasury Department have various programs in which Navy Federal participates that may provide additional options for mortgage loan modification or refinance. Longer-term forbearance options may also be available to members or the spouses of members who were injured or died on Active Duty military service, and short-sale or deed-in-lieu of foreclosure options may be available to servicemembers who have received permanent change of station orders.

Will SCRA protection prevent foreclosure of my home?

If your home is eligible for protection, SCRA benefits and protections will be applied. For your awareness, lenders may not foreclose on properties that secure mortgages held by servicemembers that were originated prior to military service without a court order or a written waiver from the servicemember.  

Does SCRA affect Navy Federal’s ability to repossess my car if I am a servicemember?

When you apply for SCRA benefits and your vehicle is eligible for protection, that protection prevents lenders from repossessing during your military service without a court order or a written waiver from the servicemember.

I’ve heard that my state may provide me with additional benefits or protections different from those provided by the SCRA. Can I apply for those benefits for my loans with Navy Federal?

Yes. Certain states have enacted their own state benefits. When you submit your SCRA request, please indicate if you’re also requesting benefits for a specific state. Your request will be reviewed for eligible benefits and protections for both federal SCRA and the state benefits in your request.