• SCRA Does Not Apply To Loan Originated During Military Service
  • August 24, 2017 | Authors: Marjorie A. Corwin; Robert A. Gaumont; Christopher R. Rahl
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • The federal Service members Civil Relief Act (SCRA) precludes lenders from foreclosing on mortgages from members of the military for loans “originated before the period of the servicemember’s military service” without first obtaining a court order. On July 17, 2017, the United States Court of Appeals for the Fourth Circuit held that an individual who obtained a mortgage loan while enlisted in the United States Navy, was discharged from military service and then defaulted on the loan, and during foreclosure proceedings, enlisted in the United States Army, could not benefit from the foreclosure protections of the SCRA. In affirming the lower court’s granting of summary judgment in the lender’s favor, the court held that the public policy underlying the SCRA was to prevent financial hardship by servicemembers for unexpected adjustments in income after joining the military. This public policy reason was not satisfied when the mortgagor was actually in military service at the time the loan was made because the servicemember was then “fully aware of his military pay and lifestyle.” Further, “[a]dditional military service does not retroactively erase the servicemember’s and lender’s knowledge of the risks attending an obligation during service or alter the substance of the risks for which the SCRA provides protection.” Please contact Robert Gaumont for more information related to this topic.