Academic journal article ABA Banking Journal

Servicemember Disclosure a Must on All Mortgages

Academic journal article ABA Banking Journal

Servicemember Disclosure a Must on All Mortgages

Article excerpt

Q. Our system automatically generates a Servicemembers Civil Relief Act disclosure for a customer who is 36 days past due. Are we required to send the disclosure if we know that the borrowers are not on "active duty" nor serving in the military?

A. Yes, the Notice of Servicemember Rights is required.

According to the Department of Housing and Urban Development, the SCRA Notice must be sent to "all homeowners" because a lender may not know that a particular homeowner has been called to active duty.

Therefore, according to HUD's Mortgagee Letter 2006-28:

"Pursuant to the statutory amendment, HUD has developed, in consultation with the Departments of Defense and Treasury, the form for the required notice of servicemember rights.... All mortgage loans, including conventional mortgages and mortgages insured by HUD are subject to the notification requirement that became effective June 5, 2006. The notice must:

* Be sent to all homeowners who are in default on a residential mortgage;

* Include the toll-free Military OneSource number to call if servicemembers or their dependents require further assistance (1-800-342-9647); and

* Be made within 45 days from the date a missed payment was due, unless the homeowner pays the overdue amount before the expiration of the 45-day period."

(Emphasis added. Response Provided 09/8/2010)

Auditor's wrong on proper timing of ECOA notices

Q. One of our auditors is asking us to change our procedures and provide the Equal Credit Opportunity Act notice at the time of the application. We thought this was only required when adverse action is taken, Is this correct?

A. The ability to provide a notice of an applicant's right to a statement of reasons for the denial of credit at the time of application is allowable in connection with business credit.

This is a permissive option, not a mandatory requirement. See Section 202.9 (a) (3) (i)B) of Regulation B ("may be given at the time of application."). In other words, your auditor has no legal basis to demand that you follow this option, as long as you are providing the disclosure with any adverse action notice.

If you are giving this notice at application (many business applications contain this wording) it is given whether you approve or deny the application. …

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