Expanding the SCRA, If the DOJ Has Its Way

The last few weeks of 2015 saw two important legislative developments relating to the Servicemembers Civil Relief Act (SCRA). First, in November, the Department of Justice (DOJ) submitted a legislative package to Congress with proposed revisions to several existing laws that protect service members, including several significant changes to the SCRA. If accepted by Congress, these changes would codify many of the positions that the DOJ has taken in recent SCRA settlements. Even if Congress declines to implement the DOJ’s proposed changes, however, this legislative package offers a window into what the DOJ expects from financial institutions—and may itself impose through enforcement. Of particular note, the DOJ’s legislative package would revise the following sections of the statute:

• the default judgment provisions of the SCRA, including the affidavit requirement and expectations for attorneys appointed to represent service members;
• the definition of military orders under the SCRA;
• the notice requirement for borrowers seeking the SCRA’s interest rate benefit;
• expanded protections under installment sales contracts and residential and motor vehicle leases;
• enforceability of arbitration requirements;
• DOJ’s investigatory and enforcement authority.

Second, effective Dec. 1, the House of Representatives Office of the Law Revision Counsel (OLRC) eliminated the entire appendix to Title 50 of the U.S. Code and recodified the SCRA into a different section of the U.S. Code.2 The statute itself was not amended, and the recodification results in no substantive changes. Changes to the citations, however, impose burdens related to the updating of policies, procedures, and other documentation.

Originally published in Bloomberg BNA; reprinted with permission.