A borrower has a qualifying pre-service mortgage at 7.5%. Assume the borrower's SCRA interest-rate protection begins March 1 upon entry into military service, with no earlier protected period. The servicer receives timely written notice and required documentation in April. No court-granted creditor relief applies. What interest-rate treatment is required?
Correct Answer
D) Apply the 6% cap retroactively to March 1 and through one year after military service ends
D. Apply the cap from the stated protection start through the mortgage-specific post-service year. The April request does not eliminate the earlier protected period. Interest above the cap is forgiven, not stored for collection after service. Scope and exceptions: Timely notice generally means no later than 180 days after service ends. Other debt types do not receive this mortgage-specific extra year. Court relief and eligibility must be assessed where not excluded by the facts. Source: How to request; After receiving your request — https://www.justice.gov/servicemembers/your-rights-servicemember-6-interest-rate-cap-servicemembers-pre-service-debts 50 USC 3937(a)–(c), 2023 edition — https://www.govinfo.gov/content/pkg/USCODE-2023-title50/html/USCODE-2023-title50-chap50-subchapII-sec3937.htm
Why This Is the Correct Answer
D. Apply the cap from the stated protection start through the mortgage-specific post-service year. The April request does not eliminate the earlier protected period. Interest above the cap is forgiven, not stored for collection after service. Scope and exceptions: Timely notice generally means no later than 180 days after service ends. Other debt types do not receive this mortgage-specific extra year. Court relief and eligibility must be assessed where not excluded by the facts.
Why the Other Options Are Wrong
Option A: Cap it at 6% only from the April notice date
It starts too late under the supplied facts.
Option B: Cap it at 6% for the remaining life of the mortgage
This protection does not automatically last for the entire loan term.
Option C: Leave it at 7.5% because it predates military service
Pre-service origin supports eligibility rather than defeating it.
Exam Tip
Separate the request date from the protection start date.
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