TO: ALL TENNESSEE STATE CHARTERED BANKS AND
SAVINGS BANKS
SUBJECT: SOLDIERS AND SAILORS CIVIL RELIEF ACT OF 1940
DATE: October 9, 2001
In light of the recent terrorist attacks and the President’s subsequent
call-up of various military personnel, the Department of Financial Institutions
wishes to remind our state chartered financial institutions about the provisions
of the Soldiers and Sailors Civil Relief Act of 1940 (SSCRA) that affect certain
financial liabilities of military personnel, including in particular military
reservists called to active duty, and new members of the armed forces.
Among its provisions, the act requires financial institutions to lower the
interest rate to a maximum of six percent for mortgage, auto and other
installment loans incurred by those military personnel prior to active duty for
the period of military service. The interest rate includes fees and most other
charges.
The act also restricts a financial institution’s ability to take default
judgements and other judicial actions against active duty military personnel as
a result of their failure to perform on loan obligations and restricts an
institution’s ability to foreclose on mortgages entered into before beginning
military service.
In addition to the above, other provisions of the SSCRA may be relevant to your
institution’s operations or your borrower’s circumstances. Therefore, we
encourage management to work with your legal counsel and/or trade groups to
ensure your institution’s compliance with the technical requirements, as well
as spirit, of the SSCRA.
If you have any questions, please feel free to contact our office at (615)
741-2236.
.
Fred R. Lawson
Commissioner
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