Financial Protections for Military Personnel and Their Families

We here at Somerville Bank salute and appreciate each and every servicemember – whether past or present. We also extend our appreciation to the families of our servicemembers for their sacrifices and contributions to the liberties and freedoms that we experience in the United States. Thank you – to each and every single one of you. In this guide, we will provide comprehensive information on various types of financial protections that are available to both military personnel and their families.

Military Family

The Military Lending Act

The Military Lending Act – also known as the “MLA” – provides various types of protections directly to servicemembers considered active duty. First, it limits the overall interest rate on consumer loans to not exceed 36% or the amount outlined in the Military Annual Percentage Rate or “MAPR”. This cap includes various costs.

Examples include credit-based insurance premiums, application fees, finance charges, and add-on credit-based products. It also aids in the prohibiting of lenders in charging penalties associated with prepayments and the submission of waiving SCRA rights and directly to mandatory-based arbitrations.

Examples of protected loans that are directly covered by this lending act include refund loans, payday loans, overdraft credit lines, title loans, and specific types of installment loans as outlined in the terms and conditions.

Active-duty personnel, reservists involved in the federal active-duty program, servicemembers on leave due to certain events, National Guard members during national emergencies, those officers with the Atmospheric Administration or the Public Health Service, the spouse, and the children.

The Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act (SCRA) was established by Congress to help in ensuring that all military personnel may focus on their duties to the country without suffering from financial-based complications with their affairs as a direct result of that service. This act helps in providing relief in loans, the foreclosures of mortgages, agreements on rental property, leases on housing and automobiles, as well as credit reports.

The most significant of all provisions is the limitation that is placed on interest rates associated with financial products. This cannot exceed 6% each year; however, as a servicemember, you must request this. It will start on the date of the entrance into the military service. When it comes to mortgages, it extends up to one year following the completion of the service. Military personnel must put this request in writing directly with the bank or with the lender. The financial lender will then retroactively reduce the interest rate back to the beginning of the entrance into the military once all necessary documentation has been received.

Other Protections Offered by the SCRA

In addition to the reduction in the interest rate on financial products, the SCRA offers the following protections:

  1. Eviction Protection – The military personnel, their spouse, and their dependents may not be evicted from their home unless it is issued by a court order. In some instances, it may be when the rent monies owed exceeds a certain amount while actively serving in the military.
  2. Foreclosure Protection – If personal property was obtained before going into the military and is secured by a trust, deed, or mortgage, it cannot be sold, seized, or foreclosed on while in the military and up to one year afterwards, unless a court order is obtained.
  3. Apartment Leases – The termination of a lease prior to going active is considered permissible. This is especially true if the deployment will last for longer than 90 days. This is also permissible if the change of the duty station has changed and that change is considered to be permanent. The military personnel are responsible for unpaid rent, unpaid fees, and any associated damaged prior to the termination date.
  4. Automobile Leases – If a military member signs a lease prior to going active that will last longer than 180 days, they may legally terminate an automobile lease.
  5. Credit Protection – No lender can either deny or revoke any type of credit. The terms of any outstanding loan cannot be changed. Also, credit cannot be denied because of any type of SCRA protections being sought.

How to Make the Most of the MLA and Associated SCRA

To make the absolute most of the benefits you and your family can receive from the MLA and the SCRA, take the following steps:

  1. Open a bank account that offers direct deposit services. Not only will you receive your money quicker, but the money will be protected by the FDIC – even if your chosen bank fails.
  2. Carefully review the MLA and the SCRA to ensure that you have performed the steps required to request relief.
  3. Create a balance. Be certain to set up emergency funding. You should have a special savings account to place these emergency funds. This way, if difficulties arise while you are actively serving, you and your loved ones are able to access the funds.
  4. Order a free credit report each and every single year. You should check all of the information to ensure that everything is complete. If you find that anything suspicious is on the report, contact the credit reporting agency immediately.
  5. Sign up for credit evaluations. There are many websites that offer this. One example is Credit Karma.

Contact Us Today

We here at Somerville Bank offer many types of accounts and services to service members and military families. We specialize in checking accounts, savings accounts, deposits, loans, mortgages, online banking, and more. We pride ourselves in offering products and services that are low in cost and highly beneficial to those that require them. We currently have banks in a total of eight different locations between Richmond, Indiana, and Ohio.

Regardless of your needs, we have financial products and services that will benefit you. Established in 1910, we continue to offer our services and products. We also provide our shareholders with an above-average return on the various investments while also maintaining and managing a local bank that is heavily capitalized. If you would like to learn more, contact us at one of our locations today: https://somervillebank.net/locations/