Reply #16: They may not be violating the Act... [View All]

[Polemicist]

As a mortgage person and a Banker from days gone by, I have dealt with the Sailors and Soldiers Relief Act. It is a law from World War II, that specifies what a creditor can do to a debtor that has been called to active duty.

A few specifics. Entitlement under the act isn't automatic. The debtor must request protection from the creditor under the act. If the debtor doesn't know to do so, in writing, then they do not have any protection under the act. I always told servicemen's families what to do, but a less ethical collector might just let them get in trouble due to a creditor's lack of knowledge.

Secondly, payments aren't placed in total abeyance during the term of military service under the act. The loan is placed on an interest only basis, and interest adjusted to 6% (if the loan carries a higher rate than that) and the payments are converted to interest only, monthly, during this period.

Sometimes that's not much relief on a mortgage loan, where interest can be the majority of the payment in the earlier years of the loan. So a family must apply for relief on all accounts and reduce their monthly outgo on car and credit cards and apply that savings toward the mortgage that might not be reduced.

I could see how some will still lose their houses. It's not a great system and could be improved for servicemen.

I just read another post that the law was amended last year. I am unfamiliar with any changes. I dealt with the law before it was amended. But I doubt they changed the interest only monthly payment requirement, with the power the banks have. They would have pitched a fit if anyone tried to keep them from collecting interest and payments on their loans under any circumstances.