Service Members’ Right to Interest Reduction to 6%

Under the Servicemembers Civil relief act (SCRA), the maximum interest rate that may be charged on certain VA loans is 6 percent during the period of the servicemember’s qualifying military service.  Also established with the foregoing, the SCRA restricts foreclosures on obligations held or guaranteed by servicemembers, provides protections against default judgments, and permits early termination of certain leases, including motor vehicle leases. Under most circumstances, the loan holder, your loan servicer, will determine automatically whether the borrower might qualify for this interest rate limitation and apply any reduced rate.

In the past several years this has not been an issue with mortgage loans, of course, but more recently, particularly for the past few months, interest rates above six percent have been common on new loans. So the 6% percent ceiling is now relevant again.

You can request an interest rate reduction from your lender at any time while you are serving on active duty and up to 180 days after release from active duty. A lender can’t revoke your loan or credit account, change the terms of your credit, or refuse to grant you credit just because you exercised your SCRA rights.

If you believe you may be applicable for an interest rate reduction or have any other questions about how our firm is able to assist in this process, contact an attorney at Law Firm Carolinas to assist you.

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