Servicemembers' Civil Relief Act
Under the Servicemembers' Civil Relief Act (SCRA), mortgage lenders are required to charge no more than 6 percent interest for active duty military personnel, including National Guard and Reservists.
Ginnie Mae will make payments of interest on pooled loans backing mortgage-backed securities to an Issuer for interest in excess of 6 percent for payments collected regardless of where the active duty military personnel are called to serve.
Ginnie Mae has extended the period for which it reimburses Issuers for SCRA shortfalls to include an additional 12 months past the SCRA borrower's official end of duty. This extended performance period is set to expire on December 31, 2015.
Any loan for which the borrower's active duty ends on or after December 31, 2015, is not eligible for the additional one-year reimbursement period, unless extended by Ginnie Mae. After the expiration of the extended reimbursement period, Issuers must continue to comply with SCRA interest forgiveness provisions, and fund out of the Issuer's corporate funds any shortfall necessary to ensure timely payment to security holders.
To receive a reimbursement of interest, an Issuer must demonstrate that the borrower meets the criteria for interest forgiveness. Issuers must also prove the amount of interest that needs to be reimbursed.
Eligibility requirements for the SCRA interest reduction include a letter from the borrower stating that he or she is a member of the U.S. Military Reserves or National Guard who was called to active duty (a spouse or an attorney may also make the request). The loan must be a contractual obligation of the service member, who can be the borrower or co-borrower.
Servicers must also verify:
The date on the induction order (activation date) and the mortgage date to ensure that the mortgage pre-dates the induction order; and,
The rank, branch of service, and service number for the borrower.
Issuers must keep the request and appropriate records for Ginnie Mae's inspection in both the loan and pool files. Before making a request for reimbursement, Issuers must submit a SCRA Loan Eligibility Information form in both hard copy and electronic format. Instructions for generating a hard copy and the data file for electronic transmission of the form are included in Ginnie Mae’s All Participants Memoranda 96-9 and 99-14.
Each month, servicers must account for SCRA loans on their Monthly Accounting Report. An attachment to the All Participants Memorandums explains how to report payments on eligible loans. Issuers may submit requests for reimbursement on a quarterly basis only. Requests are to be submitted by February 10, May 10, August 10, and November 10.
If you have any questions about our SCRA program, please contact Ginnie Mae's SCRA Coordinator on our SCRA Hotline at: 1-888-446-6434 (option 3).