QUESTION
We are a lender that originates mortgage
loans primarily for active military service people, reservists and veterans. We would like to ensure that our lending
extends to any person in the military. But we are not sure that the regulations
offer enough guidance to us. What is a definition we can use to determine
whether a person is in the military?
ANSWER
I think you’ll find
that the Servicemembers Civil Relief Act (SCRA) will provide a good working
definition. The SCRA defines the term “person in the military service” to
include only members of the Army, Navy, the Marine Corps, the Air Force, the
Coast Guard, the National Guard, and all commissioned officers of the
Public Health Service or active in the National Oceanic and Atmospheric Administration. [50
USC 501 et seq.; 10 USC 101]
Actually, the SCRA’s definition
of “servicemember” means a member of the uniformed services (which is defined
in 10 USC 101). The Army National Guard generally is part of the U.S. Army and
the Air National Guard is part of the U.S. Air Force, as implied by the SCRA’s definition
of “military service” and the definition of “uniformed services.” It is worth
noting that the Federal Reserve’s Division
of Consumer and Community Affairs Letter 05-3, dated May 6, 2005, says
“[t]he law protects, among others, active duty members of the Army, Navy, Air
Force, Marine Corps, or Coast Guard, including members of the National Guard
called to active service.”
The term “military
service” means federal service on active duty, or in the case of a member of
the National Guard, service under a call to active service authorized by the
President or the Secretary of Defense for a period of more than 30 consecutive
days for purposes of responding to a national emergency declared by the
President and supported by federal funds. [32 USC § 502(f)]
“Active duty” includes
any period during which a person in military service is absent from duty on
account of sickness, wounds, leave, or other lawful cause. You may have come across
the term “period of military service”. This term means the period beginning on
the date a servicemember enters military service and ending on the date on
which the servicemember is released from military service or dies while in
military service.
The benefits of the SCRA also extend to persons who serve with the
forces of any nation with which the United States may be allied in the
prosecution of any war in which the United States engages and who immediately
prior to service were citizens of the United States, if the service is similar
to military service as defined in the SCRA, unless they are dishonorably
discharged or it appears that they do not intend to resume United States
citizenship. The term of military service also includes the period from receipt
of induction orders to actual induction.
There are statutes in
many of the states, often referred to as “mini-SCRA” statutes, that specifically
incorporate some or all of the provisions of the SCRA, and some specify that
coverage extends to National Guard members who receive orders from the state’s
governor. Two instances of such mini-SCRA statutes are Virginia [Virginia Code
§§ 44–102.1] and Utah [Utah Code § 39-7-101 et seq.].
I probably don’t have to remind you that, in the
event of a violation of the SCRA, an aggrieved servicemember might bring an
action under both federal and state statutes. So, be sure to familiarize yourself
with applicable state provisions in any state where you originate loans to military
persons.
Jonathan Foxx, PhD, MBA
Managing Director
Lenders Compliance Group
