Financial and Housing Rights
The Civil Rights Division enforces the Servicemembers Civil Relief Act (SCRA), which helps servicemembers manage the transition to active duty through a range of protections regarding foreclosure, repossession, leasing agreements, evictions, interest rates, and default judgments.
About the SCRA
The SCRA provides a wide range of benefits and protections to those in military service. 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, Coast Guard and Space Force); 2) reservists on federal active duty; and 3) members of the National Guard on federal orders for a period of more than 30 days. Servicemembers absent from duty for a lawful cause or because of sickness, wounds, or leave are covered by the SCRA. Commissioned officers in active service of the Public Health Service (PHS) and the National Oceanic and Atmospheric Administration (NOAA) are also covered by the SCRA.
The SCRA also provides certain benefits and protections to servicemember dependents and, in certain instances, to those who co-signed a loan for, or took out a loan with, a servicemember. 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.
For most servicemembers, SCRA protections begin on the date they enter active duty military service. For military reservists, protections begin upon the receipt of certain military orders.
The SCRA’s benefits and protections include a 6 percent interest rate cap on financial obligations that were incurred prior to military service; the ability to stay civil court proceedings; protections in connection with default judgments; protections in connection with residential (apartment) lease terminations; and protections in connection with evictions, mortgage foreclosures, and installment contracts such as car loans.
Read this fact sheet for general information on SCRA. More detailed information on these benefits and protections appears below.
The SCRA permits a servicemember who signs a lease and then receives military orders for a permanent change of station, a deployment for 90 days or more, or separation/retirement, to terminate his or her lease at any time after receiving those orders, without penalty. The servicemember’s spouse or dependents can also exit the lease early without penalty if they are on that lease.
Visit our fact sheet on residential lease termination for more information, including responses to frequently asked questions.
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 6 percent per year, including most fees. In order to have the interest rate on a financial obligation such as a credit card or a mortgage capped at 6 percent per year, a servicemember must provide the creditor with written notice and (1) a copy of his or her military orders or (2) “other appropriate indicator of military service” (such as a letter from a commanding officer). The written notice and proof of military service must be provided to creditor within 180 days of the end of the servicemember’s military service.
In response, a creditor must forgive – not defer – interest greater than 6 percent per year. The creditor must forgive this interest retroactively. The creditor is also prohibited from accelerating the payment of principal in response to a properly made request for a 6 percent interest rate cap.
For mortgages, interest is capped at 6 percent during the entire period of military service and for one year after the period of military service. For all other obligations, interest is capped at 6 percent only for the duration of the period of military service.
The SCRA’s 6 percent interest rate benefit applies to all types of pre-service debts, financial obligations, and liabilities. Some examples include: credit cards; automobile, ATV, boat, and other vehicle loans; mortgages; home equity loans; and student loans.
Read this fact sheet for more information about the 6 percent interest rate benefit.
Even if you are a servicemember, if you are behind in your mortgage your creditor (bank/lender) may foreclose upon that mortgage. However, in any civil court proceeding in which a defendant servicemember does not make an appearance, including a foreclosure that proceeds through a court process, a plaintiff creditor must file an affidavit with the court stating one of three things:
- That the defendant is in military service;
- That the defendant is not in military service; or
- 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.
Please note that foreclosures can 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, and states typically dictate which way foreclosures will proceed within their borders.
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 until after it appoints an attorney to represent the interests of that defendant servicemember. 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.
Under the SCRA, during a period of military service, and for one year after a period of military service, a creditor must get a court order prior to non-judicially foreclosing on a servicemember’s mortgage. The mortgage at issue must have been taken out by a servicemember prior to entering military service in order for this protection to be applicable. A person who knowingly violates this provision of the SCRA may be fined and/or imprisoned for up to one year.
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.
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.
The SCRA permits a servicemember who is leasing a vehicle in a U.S. state or territory to end their vehicle lease early, without penalty, if they sign a lease and then later:
- Enter active duty for at least 180 days, or
- Receive orders for deployment for at least 180 days, or
- Receive orders for a permanent change of station, retirement, or separation, and:
- If the vehicle is outside the continental U.S. – the orders require moving out of the U.S. state or territory.
- If the vehicle is inside the continental U.S. – the orders require moving out of the continental U.S.
If they are on the lease with the servicemember, a servicemember’s spouse and dependents can also exit the lease early without penalty.
Visit our fact sheet on vehicle lease termination for more information, including responses to frequently asked questions.
A landlord may not evict a servicemember, or his/her dependents, from a residential home during a period of military service without first obtaining a court order. This requirement applies regardless of whether a state otherwise permits evictions without court orders (also known as non-judicial evictions).
Furthermore, if a landlord or property manager pursues a court order through a default judgment, the SCRA requires that they file an affidavit notifying the court of the tenant’s military status. If the tenant is in military service, the court must appoint a guardian ad litem to represent the interests of the servicemember. The court may also postpone the judgment by 90 days if the servicemember cannot be reached or the servicemember’s appearance is necessary to present a defense.
The SCRA allows servicemembers to waive their rights under the SCRA, provided that the waiver is executed: (1) as an instrument separate from the contract, (2) during or after the relevant period of military service, and (3) in at least 12-point font.
The Department of Justice has taken the position that waivers are invalid if they are addenda to a lease and not separate instruments, are signed at the same time as the lease, and are not supported by any additional benefit to the servicemember.
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. The Attorney General may also file such a suit where the facts at hand raise “an issue of significant public importance.” When the Attorney General files a lawsuit under the SCRA, he has the authority to seek monetary damages on behalf of individual servicemembers. The Attorney General also has the authority to seek civil penalties, equitable relief, and declaratory relief.