Update on Servicemembers Civil Relief Act Notice

Since the Servicemembers Civil Relief Act (SCRA) notice expired at the end of 2017, we have been waiting for an updated notice that all banks must provide to mortgage loan borrowers within 45 days of delinquency.  The Department of Housing and Urban Development (HUD), who publishes the notice, posted a request in the Federal Register on January 16, 2018 to update the form (OMB 2504-0584/HUD 92070), which also included a comment period ending on February 15, 2018.

Key Areas

In late December 2017, President Trump signed an extension of the Servicemembers Civil Relief Act Foreclosure Protection Law through December 31, 2019.  These protections would have expired at the end of 2017.  This action extends the one-year period after a service member's military service during which “a court may stay proceedings to enforce an obligation on real or personal property owned by the service member before such military service; and any sale, foreclosure, or seizure of such property shall be invalid without a court order or waiver agreement signed by the service member”. 

The most recent edition of the notice provided to delinquent borrowers expired on December 31, 2017 and, as noted above, HUD has initiated the necessary steps to update the notice.  The wheels of government turn very slowly and it is a waiting game for the notice to be updated and published.  Banks should continue to use the current (expired) notice until the notice is updated and available.

As a side note: in conducting loan compliance reviews during the past year and post- implementation of the Military Lending Act, we often see the SCRA “Safe Harbor” notice being issued and provided to borrowers at consummation.  We recommend that banks discontinue use of this notice.

Action Plan

To ensure compliance, we recommend that responsible staff continue to monitor HUD’s website for the updated form and ensure the bank’s contact information is inserted in the appropriate paragraph of the form.

Here’s the link to the forms directory: 

https://www.hud.gov/program_offices/administration/hudclips/forms/hud9