SCRA Protections for Homeowners: The 6% Cap and Foreclosure Protection

If you took out your mortgage before you entered active-duty service, the Servicemembers Civil Relief Act (SCRA) can cap its interest rate at 6% while you serve and for one year after, and it bars your lender from foreclosing without a court's permission during that same period. The protections don't switch on by themselves: for the rate cap, you send your lender a written request with a copy of your orders.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living and the Market Center Representative for KW Military. I served 10 years in the U.S. Army Reserve. A call to active duty can change a household's budget, and federal law has protections for that. I'm not a lawyer, and this isn't legal advice. It's what the federal law and the agencies that enforce it say, so you know what to ask about.

What is the SCRA?

The Servicemembers Civil Relief Act is a federal law that gives service members certain financial and legal protections while they serve. Military OneSource says it covers active-duty service members, including National Guard and Reserve members, and their families. Whether your orders qualify is a question for your legal assistance office.

For homeowners, two parts matter most: the 6% interest rate cap and the limits on foreclosure.

How does the SCRA 6% interest rate cap work on a mortgage?

Under 50 U.S.C. 3937, a debt you took on before military service can't carry interest above 6% a year during your service. For a mortgage, the cap continues for one year after your service ends. The Department of Justice adds that the 6% includes most fees.

A few details that make a big difference:

• It's forgiven, not deferred. The statute says interest above 6% is forgiven, and the Consumer Financial Protection Bureau says the lender can't add the difference back to your loan after you leave active duty.
• It only covers pre-service debt. The CFPB says the cap applies to loans taken out before you entered active duty. A mortgage you took out while already serving isn't covered by this rule.
• The lender can push back. A court can grant the lender relief if your ability to pay the higher rate isn't materially affected by your military service.

How do you ask for the 6% rate?

According to the CFPB, you notify your lender in writing and include a copy of your orders to active duty, or a letter from your commanding officer. You can make the request while you're serving or up to 180 days after you're released from active duty, which matches the statute's deadline.

Keep a copy of everything you send and note how and when you sent it. If the lender doesn't respond, that record matters.

What foreclosure protection does the SCRA give?

Under 50 U.S.C. 3953, for a mortgage that originated before your military service, a sale, foreclosure or seizure isn't valid if it's made during your service or within one year after it, unless a court ordered it first or it was done under a valid agreement. The CFPB puts it plainly: the lender must have permission from the court before it can foreclose, and the protection lasts through your active-duty service and for one year after you leave.

You may still see older sources describe a nine-month window. The statute was amended in 2012 to one year, and a 2018 law removed the scheduled return to the shorter period.

Does the SCRA stop you from owing the mortgage?

No. The SCRA changes the rate on a pre-service loan and how a foreclosure can happen. It doesn't erase the debt or the payments. If you're falling behind, talk to your servicer early. If your loan is VA-backed, VA's Home Loan Guaranty Buyer's Guide says you can call 1-877-827-3702 to reach a VA Regional Loan Center about your home loan situation.

What if selling makes more sense?

Sometimes the right move is selling on your schedule instead of waiting for the numbers to get worse. That decision starts with one figure: what the home would sell for today. My home value tool gives you a starting number, and I'll back it with a market evaluation for any home in Monmouth or Ocean County. If you're already on orders, I can run the sale while you're gone. Read sell or rent on PCS orders to compare your options, and how I sell homes for the process.

Where can you get help with the SCRA?

• Your installation's legal assistance office. The CFPB points service members to the military legal office locator at legalassistance.law.af.mil.
• The CFPB, if you have a problem with a financial company: consumerfinance.gov/complaint or (855) 411-2372.
• The Department of Justice, which enforces the SCRA and takes reports of violations through civilrights.justice.gov/report.

Frequently Asked Questions

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

No. The CFPB and the statute describe it as covering debts taken on before you entered active-duty service.

How long does the 6% cap last on a mortgage?

The cap lasts for the whole period of military service and one year after, under 50 U.S.C. 3937.

How long after service does foreclosure protection last?

Foreclosure protection is in place for one year after your service ends, under 50 U.S.C. 3953, for mortgages that originated before your service.

What's the deadline to request the 6% rate?

You can request it up to 180 days after you're released from active duty, with written notice and a copy of your orders.

This is general information, not legal, tax or lending advice. Your installation legal assistance office or an attorney can tell you how the SCRA applies to you. This site isn't affiliated with or endorsed by the Department of Veterans Affairs or the Department of Defense.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark, or see how I handle military moves.

Keep reading

• The Military Home Guide
• Breaking a lease on military orders to buy a home
• NJ's property tax deferment for deployed service members
• Have a question this didn't answer? Send it to Dennis Mark.