To the Officers and Managers in Charge of Consumer Affairs Sections at Each Federal Reserve Bank and Each Domestic and Foreign Banking Organization Supervised by the Federal Reserve:
The Board of Governors of the Federal Reserve System Division of Consumer and Community Affairs issued a letter (CA 05-3) on May 6, 2005, to remind organizations under Federal Reserve supervision of their obligations under the Servicemembers Civil Relief Act (SCRA). The SCRA was signed into law on December 19, 2003, amending and replacing the Soldiers’ and Sailors’ Civil Relief Act of 1940.
Among other things, the SCRA seeks to strengthen the national defense by providing for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the rights of servicemembers during their military service. The 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. Dependents of servicemembers are protected in some situations.
This guidance is intended to provide general information about certain provisions of the law that are most likely to affect organizations supervised by the Federal Reserve, specifically relating to interest rates that may be charged to servicemembers on active military duty, prohibitions on foreclosures of home mortgages, restrictions on the termination of installment loans, and the prevention of evictions and repossessions of personal property during active duty periods.
Since other provisions of the SCRA may apply to the organizations under the Federal Reserve’s supervision and, the SCRA does not grant the Federal Reserve interpretive authority, institutions we supervise are encouraged to seek the advice of counsel to ensure that they are in full compliance with the law.
Legal and Compliance Risk Department
William L. Rutledge
Executive Vice President