SCRA Compliance for Lenders & Servicers: The Audit-Ready Checklist

This page is for the people who make the SCRA work inside a lender: compliance, servicing, collections, recovery, and the counsel who signs the affidavits. Servicemembers should read along; every rule below is one you can hold your lender to.

The Justice Department has obtained over $488 million for 152,000 servicemembers through SCRA enforcement since 2011, by its own count in the April 14, 2026 ADT release. This site’s enforcement ledger transcribes 64 of those actions from DOJ’s records, and they say one thing: the violations are operational, not exotic. Someone did not check DMDC, someone applied the cap to one account, someone signed an affidavit without looking. Every statute section below was read at uscode.house.gov on August 15, 2026, and every dollar figure is tied to the source that printed it.

The 6% cap, from your side of the counter (§ 3937)

The rule is short. An obligation the servicemember (or the servicemember and spouse jointly) incurred before entering military service may not bear interest above 6% per year during the period of service, and for a mortgage, during service and one year after (§ 3937(a)(1)). What triggers your duty and what it requires:

• Trigger. Written notice plus a copy of the orders calling the servicemember to service (and any extension), or “any other appropriate indicator of military service, including a certified letter from a commanding officer” (§ 3937(b)(1)(A)). The servicemember has until 180 days after termination or release from service to deliver it. A request that arrives after separation is timely if it lands inside that window.
• Effective date. On receipt, you treat the debt at 6% “effective as of the date on which the servicemember is called to military service” (§ 3937(b)(2)). Not the date of the letter, not the date you processed it.
• Forgiven, not deferred. Interest above 6% “is forgiven” (§ 3937(a)(2)), and the periodic payment must drop by the forgiven amount (§ 3937(a)(3)). Booking the excess to a deferred bucket or extending the term instead of cutting the payment is not compliance.
• What counts as interest. “Service charges, renewal charges, fees, or any other charges (except bona fide insurance)” (§ 3937(d)(1)). Test the all-in rate, not the contract APR.
• Your DMDC alternative. You “may use, in lieu of notice and documentation,” status information retrieved from the Defense Manpower Data Center through your normal business reviews (§ 3937(b)(1)(B)(i)). The safe harbor in clause (ii) protects you only if DMDC showed the person not on active duty on the date you pulled it and no notice arrived by the end of the 180-day window. Keep the dated printout; the safe harbor turns on that date. The DMDC website guide covers the single and batch lookups.
• Your petition path. A court may relieve you of the cap if, in the court’s opinion, military service does not materially affect the servicemember’s ability to pay above 6% (§ 3937(c)). That is a petition you file and a finding a judge makes. It is not a determination your underwriting team makes internally.
• Criminal exposure. A knowing violation of subsection (a) is punishable by a fine under title 18, up to one year in prison, or both (§ 3937(e)).

The one-account trap is the failure DOJ has seen most. A servicemember writes about a card and stays at 19.99% on the auto loan the same bank holds. The 2012 Capital One consent order required a request on one account to be treated as a request on every account the bank or its affiliates held. Build that rule into intake whether or not a consent order tells you to. The servicemember-side mechanics are on the rate cap guide, and the refund calculator shows what a late or partial application costs.

No adverse action for asking (§ 3919)

A servicemember’s application for, or receipt of, SCRA relief “shall not itself” be the basis for a determination that the servicemember cannot pay, a denial or revocation of credit, a change in the terms of an existing credit arrangement, a refusal to grant credit on the terms requested, an adverse credit report, or an annotation identifying the person as Guard, Reserve, or Space Force (§ 3919). Closing a card because the holder invoked the cap, or cutting the limit, is the textbook violation. Furnishing a derogatory tradeline for the same reason is another. What the SCRA does not do is erase a payment the borrower actually missed for unrelated reasons; the credit impact page walks the line.

The court-order gates: repossession, foreclosure, storage liens

Three sections put a judge between you and the collateral. None of them require the servicemember to have told you anything.

§ 3952, installment contracts and leases. After a servicemember enters service, a contract for the purchase or lease of real or personal property, including a motor vehicle, “may not be rescinded or terminated for a breach … nor may the property be repossessed for such breach without a court order,” provided a deposit or installment was paid before service (§ 3952(a)). Knowing self-help repossession is a misdemeanor (§ 3952(b)). This is the section behind Santander’s 1,112 vehicles, Wells Fargo Dealer Services’ more than 860 servicemembers, and CarMax’s 28 in 2026.

§ 3953, mortgages. For an obligation that originated before service and is secured by a mortgage or trust deed, a “sale, foreclosure, or seizure of property” is not valid if made during, or within one year after, the period of service, except on a court order granted beforehand or under a valid § 3918 waiver (§ 3953(c)). The one-year tail is the text as it reads today; earlier versions ran 90 days and nine months, and the tail became permanent in 2018. Non-judicial foreclosure states lose their shortcut. PHH paid $750,000 for six foreclosures; the National Mortgage Settlement SCRA review reached over $311 million.

§ 3958, storage liens. A lienholder, including for storage, repair, or cleaning, may not foreclose or enforce the lien during service and for 90 days after without a prior court order (§ 3958(a)). If you tow, store, or hold collateral through a vendor, this is the vendor’s exposure and, depending on your contract, yours.

Default judgments and the affidavit (§ 3931)

Before a court enters judgment for a plaintiff against a defendant who has not appeared, the plaintiff must file an affidavit stating whether the defendant is in military service with supporting facts, or stating that the plaintiff cannot tell (§ 3931(b)(1)). If it appears the defendant is serving, the court cannot enter judgment until it appoints counsel (§ 3931(b)(2)). Making or using an affidavit knowing it to be false is a crime (§ 3931(c)). The affidavit can be a written declaration under penalty of perjury (§ 3931(b)(4)), which is why a same-day DMDC certificate is the standard factual basis. Sallie Mae’s 2014 case included improper default judgments; Rental Marketing Solutions paid $60,000 in 2026 over one false affidavit and one sailor. The full procedure is on the military affidavit page.

Notices you owe

HUD-92070. Under 12 U.S.C. § 1701x(c)(5), the creditor on a home loan must send a homeowner who misses a payment a notice within 45 days of the missed due date (unless it is cured inside those 45 days), and that notice must include a plain-English HUD statement of servicemembers’ mortgage and foreclosure rights under the SCRA with the Military OneSource number. HUD’s form is HUD-92070, “Servicemembers Civil Relief Act Notice Disclosure.” The current revision read at hud.gov on August 15, 2026 is dated 4/2024, OMB approval 2502-0584, expiring 03/31/2028. HUD’s 2007 Federal Register notice states the requirement applies to “all mortgage loans, including conventional mortgages and mortgages insured by HUD.” The form itself tells the borrower there is no requirement to notify the lender before a foreclosure and that lenders “should inquire about the military status of a person by searching” DMDC.

PCS servicing guidance. The June 2012 interagency guidance from the CFPB, Federal Reserve, FDIC, NCUA, and OCC flags, among other practices, asking homeowners with PCS orders to waive SCRA rights as a prerequisite to being told about assistance options, and advising current borrowers to skip payments to qualify. It is supervisory guidance, not a regulation, and it is still hosted at consumerfinance.gov (read August 15, 2026). This page cites no Regulation X or Regulation Z provision; the obligations above stand on the statute and HUD’s notice rule.

What a violation costs (§§ 4041 to 4043)

The Attorney General may sue over a pattern or practice, or a single violation “that raises an issue of significant public importance,” and the court may award equitable relief, damages to aggrieved persons, and a civil penalty (§ 4041). The statute prints $55,000 for a first violation and $110,000 for each subsequent one; 28 CFR 85.5 adjusts those for inflation. The eCFR table, current through August 13, 2026, prints $79,380 and $158,761 for penalties assessed after July 3, 2025, and $77,370 and $154,741 for the column before it. The ledger matches: Greystar paid $77,370 in June 2025; CarMax and ADT paid $79,380 in February and April 2026. Any aggrieved person may also sue privately for equitable relief, damages, and costs including a reasonable attorney fee (§ 4042), may proceed as a class notwithstanding an arbitration clause (§ 4042(a)(3), the ruling in Espin v. Citibank), and nothing in either section limits other remedies “including consequential and punitive damages” (§ 4043).

What DOJ actually fined for

Eight lender and servicer cases from the ledger, transcribed from DOJ’s record with DOJ’s own hedges.

The full record, including Holmes Motors (July 2026, repossessions plus unrefunded lease deposits) and every towing and landlord case, is on the enforcement ledger.

The checklist

SCRA controls for a lender or servicer

1. Intake. Accept a rate cap request in any written form, with orders or any other appropriate indicator including a commander’s letter (§ 3937(b)(1)(A)). Do not require a DD-214, a notarized form, or your own template as a condition. Log the receipt date and the active-duty start date on the orders.
2. One request, every account. Search all products and affiliates for the requester and apply the cap portfolio-wide (the Capital One term). Confirm in writing which accounts were capped and from what date.
3. DMDC scrub cadence. Batch-scrub the whole portfolio on a fixed schedule and always before a repossession, foreclosure referral, lien enforcement, or default judgment motion. Retain each dated certificate; the § 3937(b)(1)(B) safe harbor and the § 3931 affidavit both rest on the date of the pull.
4. Recalculate. Reprice to 6% all-in, fees included (§ 3937(d)(1)), effective from the call-to-service date (§ 3937(b)(2)), and reduce the periodic payment by the forgiven interest (§ 3937(a)(3)). Mortgages carry the cap one year past separation.
5. Refund, do not defer. Credit the excess already collected back to the account or the borrower (§ 3937(a)(2)). Westlake’s 2022 addendum ($185,460 to 250 servicemembers) is the cost of not backdating.
6. Credit reporting. Suppress any derogatory that exists only because the cap was applied late, and never furnish adverse information because the borrower invoked the Act (§ 3919). Where you already reported, request deletion or repair, as the Sallie Mae, Wells Fargo, and Santander orders required.
7. Litigation hold. No default judgment motion without a fresh DMDC certificate attached to a truthful § 3931 affidavit. If the defendant is serving, expect appointed counsel and a 90-day minimum stay (§ 3931(b)(2), (d)).
8. Repossession and foreclosure gates. For a pre-service contract, no repossession without a court order (§ 3952); for a pre-service mortgage, no sale, foreclosure, or seizure during service or the year after without a court order or a separate written § 3918 waiver (§ 3953). Send HUD-92070 within 45 days of any missed mortgage payment. Bind your towing, storage, and foreclosure vendors to the same gates in writing (§ 3958).
9. Complaint handling. Route anything mentioning military status, orders, deployment, or the SCRA to a named owner with a service-level clock. Westlake’s addendum counted every request that waited more than 60 days.
10. Records and reporting. Keep the request, the orders or DMDC certificate, the recalculation, the refund entry, and the outbound confirmation together for the life of the account plus the period a consent order would require; DOJ orders in the ledger run three to five years with periodic reporting.

The servicemember reading this can turn each item around: if your lender cannot show you the recalculation, the effective date, and the refund, start with the request letter template, then the escalation path. Landlords have their own page: SCRA for landlords and property managers. For the pattern across all 64 cases, see the most common SCRA violations.

The law behind this: 50 U.S.C. §§ 3937, 3952, 3953, 4041

Maximum rate of interest; installment contracts; mortgages and trust deeds; enforcement by the Attorney General: read the statute.