Loans to Servicemembers SCRA Flashcards
Arthur Hadley has been a sergeant in the U.S. Army for five years. He has been stationed at an army base in the United States for the last three years. He has a banking relationship with a bank in the town where his base is located. Currently he has a car loan with two years remaining on its term and a credit card with a $1,200 balance at the bank. Both obligations were incurred after he entered into active military duty. Arthur received word that his unit is being sent overseas on a peacekeeping mission. He informs the bank officer that he would like to have his car loan stayed until he returns from his mission. He would also like to have his credit card balance stayed with no payments due until he returns. What is the bank required to do?
a. The bank must stay the installment loan payment obligation.
b. The bank must stay the credit card payment obligation.
c. The bank must stay both the installment loan and credit card obligations.
d. The bank is not required to stay either obligation.
d. The bank is not required to stay either obligation.
Eleanor Mumford is an advertising account executive. She is also a pilot in the Air Force reserve. She has a car loan with a five-year term at a nine percent interest rate and a credit card with a $5,000 balance at 12 percent annual interest. Her unit has been activated, and she will be leaving for military service. Her military pay will be less than half her civilian pay. She writes to the bank and asks that the bank lower her interest rates on the credit card and car loan for the duration of her service to six percent. She asks for her monthly car payment to be lowered also. She sends along proof of her activation and military pay scale. What does the bank have to do?
a. The bank must lower the credit card and car loan interest rates but does not have to lower the car payments.
b. The bank must lower both rates, and the car payment must be lowered to account for the new interest rate.
c. The bank has to lower only the credit card interest rate.
d. The bank does not have to do either.
b. The bank must lower both rates, and the car payment must be lowered to account for the new interest rate.
Robin Myers defaulted on her car loan at the bank. The bank sent several reminder letters and, finally, a demand for payment. The last letter said that if she did not pay, the bank would repossess the car. Before its repossession Robin joined the Marines. She sent the bank a notice that she was now in active military duty and asked the bank to forebear taking any further action against the collateral. What can the bank do?
a. Proceed with self-help repossession of the vehicle since she had already been notified of the default before joining the service
b. File a petition with a court of competent jurisdiction and ask for permission to repossess the car
c. Ask Robin’s commanding officer for permission to repossess the car
d. Repossess the car, but don’t sell it until Robin’s military service is over
b. File a petition with a court of competent jurisdiction and ask for permission to repossess the car
Martina Ruiz has an individual car loan at the bank. She makes monthly payments of $525 and has three years left on the term. She informs the bank that her husband’s U.S. Navy Reserve unit has been activated, and he will be gone for an indefinite period of time. His annual income will now be much less than it was previously. Ms. Ruiz asks the bank to lower the interest rate on this loan to six percent and lower the payments accordingly. Does the bank have to comply with this request?
a. Yes. If Ms. Ruiz can prove that her husband’s military service materially affects her ability to repay the loan, the bank must lower the interest rate and the payments.
b. No. Unless Ms. Ruiz herself is undertaking military service, the bank is not under any obligation to make an accommodation on the payments.
c. Yes, but only if Ms. Ruiz agrees not to drive the car during the duration of her husband’s military service.
d. No. Unless her husband makes the request, the bank does not have to comply.
b. No. Unless Ms. Ruiz herself is undertaking military service, the bank is not under any obligation to make an accommodation on the payments.
Stacey Robertson is in the Army Reserve. She has just heard that her unit is being activated, and she will be leaving the country for an indefinite period of time. Her salary in the Army will be close to the salary she has in civilian life. What options does she have under the SCRA to improve her financial situation before she leaves?
a. Ask the bank to lower the rate on her installment loan
b. Request a mandatory freeze on the rent she must pay for her apartment
c. Ask her credit card company to suspend charging interest pending her release from active service
d. Apply for assistance from a special SCRA fund that can cover interest payments while she is on active duty
a. Ask the bank to lower the rate on her installment loan
To what amount must a bank limit interest on debts under SCRA unless otherwise determined by a court?
a. A rate, specified by military counsel, based on the servicemember’s financial condition at the time of call to active duty
b. The Wall Street Journal’s Prime Rate in effect at the time of the servicemember’s call to active duty.
c. Six percent for all accounts made prior to the servicemember’s call to active duty.
d. The amount needed to fully amortize the debt while the servicemember is on active duty.
c. Six percent for all accounts made prior to the servicemember’s call to active duty.
Which of the following is not considered a covered borrower?
a. An active member of the National Guard
b. A 20-year-old college student who is the son of an Army sergeant
c. The ex-wife of an active Navy servicemember
d. The mother of a marine serving overseas who lives with her son’s family
c. The ex-wife of an active Navy servicemember
Which of the following is NOT a required disclosure for an income tax refund anticipation loan to a servicemember?
a. The military annual percentage rate (MAPR)
b. The annual percentage rate (APR)
c. A description of each of the events of default
d. A list of all the fees included in the MAPR
c. A description of each of the events of default
ABC Lender is located in a state with a consumer protection law requiring lenders to limit the APR on vehicle title loans to 24 percent. Which of the following is true for ABC Lender?
a. ABC Lender must abide by state law and limit its vehicle title loans to 24 percent to servicemembers.
b. The federal regulation preempts state law and ABC may charge up to 36 percent since it is governed primarily by state law.
c. ABC has a choice of law; it may choose either the federal regulations or the state law.
d. ABC may charge up to 36 percent for non-servicemember borrowers.
a. ABC Lender must abide by state law and limit its vehicle title loans to 24 percent to servicemembers.
Which of following is not considered consumer credit under the Military Lending Act?
a. Residential mortgage
b. Credit card loan
c. Payday loan
d. Unsecured consumer loan
a. Residential mortgage
