Servicemembers Civil Relief Act: the 6% cap, the foreclosure bar and the one-year tail

The SCRA caps interest on a mortgage taken out before active duty at 6% and forbids foreclosing on it without a court order during service and for a year after — if the servicemember asks.

The Servicemembers Civil Relief Act descends from the Soldiers’ and Sailors’ Civil Relief Act of 1940, itself a revival of a World War I statute, and was rewritten and renamed in 2003. It is codified at 50 U.S.C. 3901 and following and has no implementing regulation; the Department of Justice, the banking regulators and the courts apply it directly. The Act’s premise is that a person ordered to serve should not lose a home, a case or a car because service made it impossible to manage civilian obligations. For mortgage borrowers it does two large things — cap interest and block foreclosure — and several smaller ones.

Who is protected

Servicemembers on active duty: members of the Army, Navy, Marine Corps, Air Force, Space Force and Coast Guard on active duty; members of the National Guard called to federal service for more than 30 consecutive days under Title 32 in response to a national emergency; reservists from the date they receive orders to report; and commissioned officers of the Public Health Service and NOAA on active service. Protection generally begins on entry into active duty (or receipt of orders for reservists) and, for most provisions, ends within 90 days after discharge, with the one-year tails described below for mortgages. Some protections extend to dependents on application to a court, and the interest cap covers obligations held jointly by the servicemember and spouse. Veterans no longer serving are not covered, except during the post-service tails.

The 6% interest rate cap

On any obligation incurred before entering military service, interest — defined to include service charges, renewal charges and fees, but not bona fide insurance — is capped at 6% per year during the period of service. For a mortgage, trust deed or similar security instrument, the cap continues for one year after service ends. Interest above 6% is forgiven, not deferred, and the monthly payment must be reduced by the amount of forgiven interest. To invoke it, the servicemember sends the lender written notice and a copy of the orders, at any time up to 180 days after the end of service; the reduction is then retroactive to the first day of service. The lender may ask a court to deny the reduction only by proving that the ability to pay at the contract rate is not materially affected by service. Loans taken out during service are not covered, nor are refinances during service of previously covered loans; a pre-service mortgage modified during service generally keeps its protection.

Foreclosure: no sale without a court order

Section 3953 protects a mortgage originated before the period of service and secured by property the servicemember owned at the time of service. During service and for one year after, any sale, foreclosure or seizure of the property for breach of that obligation is invalid unless done under a court order or a valid written waiver. The practical effect is that non-judicial foreclosure — the trustee’s sale used in roughly half the states — cannot proceed against a covered borrower; the lender must go to court, where the judge may stay the proceeding or adjust the obligation if service affected the ability to pay. The one-year post-service period was extended several times and made permanent in 2018. A lender that knowingly forecloses in violation commits a federal misdemeanor, punishable by up to a year in prison, and the sale is void.

Procedural protections in court

In any civil action, including a judicial foreclosure, a plaintiff must file an affidavit stating whether the defendant is in military service, verified through the Defense Manpower Data Center database. If the servicemember does not appear, the court must appoint an attorney and may not enter a default judgment without a stay of at least 90 days where there may be a defense or the attorney cannot reach the client; a default entered in violation can be reopened. A servicemember who does appear may request a stay of at least 90 days by showing that duty prevents participation and that the commanding officer confirms leave is not authorized. Other provisions allow termination of residential leases on deployment orders, protect against eviction below an indexed rent threshold, and limit default on installment contracts.

Waivers, limits and enforcement

A servicemember may waive SCRA rights, but only in a written instrument separate from the obligation, executed during or after the period of service, in at least 12-point type — a waiver buried in loan documents signed before enlistment is void. The Act does not forgive principal, does not stop interest from accruing at 6%, and does not prevent a judicial foreclosure that a court allows after considering the servicemember’s circumstances. It applies only to pre-service obligations; a VA loan or any other mortgage originated during service has no SCRA foreclosure bar, though VA servicing rules and lender policies often add relief. The federal servicing rules and state foreclosure law continue to apply alongside it.

Enforcement. The Department of Justice Civil Rights Division brings suits for patterns or practices of violations and for issues of public importance, and its settlements with mortgage servicers have produced compensation for wrongfully foreclosed servicemembers. Since 2010 the Act also grants a private right of action: a servicemember may sue for damages, equitable relief and attorney’s fees. The banking agencies examine lenders for SCRA compliance, and the CFPB’s Office of Servicemember Affairs takes complaints. Fannie Mae, Freddie Mac, FHA and VA each require their servicers to identify covered borrowers and apply the protections, which is why servicers routinely screen the DMDC database.

How to use the Act

Before or as soon as possible after entering active duty, send every pre-service creditor, including your mortgage servicer, a written request for the 6% cap with a copy of your orders, and keep proof of delivery; ask for written confirmation of the new rate and payment and check the next statement. If you fall behind on a pre-service mortgage, tell the servicer in writing that you are on active duty and cite section 3953 — a non-judicial sale cannot lawfully proceed. If a sale or default judgment happened while you were serving, it may be void and a military legal assistance office can evaluate it. Dependents and spouses should know that the cap applies to joint obligations. DOJ’s plain-language materials are at justice.gov/servicemembers; our foreclosure guide and missed payment guide describe the timelines the Act interrupts, and the veterans buyer page covers VA loans, which carry their own protections.

Key points

Rewritten and renamed in 2003 from the 1940 Soldiers’ and Sailors’ Civil Relief Act; 50 U.S.C. 3901 et seq.; no implementing regulation.
Covers active-duty servicemembers, National Guard on federal orders over 30 days, reservists from receipt of orders, and PHS and NOAA officers.
6% interest cap on obligations incurred before service, lasting through service and one year after for mortgages; excess interest forgiven.
Invoke the cap with written notice and a copy of orders, up to 180 days after service ends; reduction is retroactive to the start of service.
No foreclosure or sale of a pre-service mortgage without a court order during service and one year after; knowing violations are a federal crime.
Default judgments require a military status affidavit; courts must appoint counsel and grant stays of at least 90 days on request.
Waivers valid only in a separate written instrument signed during or after service.
Enforced by DOJ, with a private right of action for damages and attorney’s fees since 2010; CFPB Office of Servicemember Affairs takes complaints.

How SCRA applies to you

Frequently asked questions

Does the SCRA 6% cap apply to a mortgage I got while on active duty?

No. The interest cap applies only to obligations incurred before the servicemember entered military service. A mortgage originated during active duty, including a VA loan, is not covered by the cap or by the foreclosure bar, although a pre-service loan that is modified during service generally keeps its protection. Lenders and VA servicing rules may offer separate relief for active-duty borrowers; ask the servicer what applies.

Does the lender have to lower my rate automatically?

No. The servicemember must send written notice and a copy of military orders; the lender then applies the 6% cap retroactively to the first day of service and forgives the excess interest. The request may be made any time up to 180 days after service ends. Some lenders screen the Defense Manpower Data Center database and apply the cap on their own, but the law does not require them to do so.

Can my house be foreclosed while I am deployed?

If the mortgage predates your military service, not without a court order. The Act makes any sale, foreclosure or seizure during service and for one year afterward invalid unless a court authorizes it or you signed a valid separate waiver. In court, a judge may stay the case or adjust the obligation if service affected your ability to pay. A lender who knowingly forecloses anyway commits a federal misdemeanor and the sale is void.

How long do SCRA mortgage protections last after I leave the military?

One year after the end of military service for both the 6% interest cap and the bar on foreclosure without a court order, under the 2018 legislation that made the one-year period permanent. The window to request the interest cap closes 180 days after service ends. Most other SCRA protections, such as court stays, end within 90 days after discharge, depending on the provision.