Servicemembers’ Civil Relief Act SCRA 2012

1. Servicemembers’ Civil Relief Act SCRA 2012

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3. Purpose The Federal Government requires financial institutions to educate their associates regarding regulations that govern the financial industry. Since SCUSA is a financial institution, our associates are required to know and comply with government regulations, including the SCRA. The SCRA provides protection to men and women who enlist, are inducted, or are called to State or Federal active military duty by the Secretary of Defense or the President of the United States. The primary purpose of the SCRA is to enable Servicemembers to devote their entire energy to the defense needs of the Nation; and to provide for the temporary suspension of judicial and administrative proceedings that may adversely affect them during military Service In addition, State Laws may provide additional protections beyond Federal SCRA requirements.

4. What’s Covered • Some of the objectives covered in the SCRA Compliance Course are: • Understanding the purpose of SCRA • Reviewing penalties for non-compliance • Reviewing Interest Rates and Fees • Reviewing SC USA Requirements

5. Definition The Servicemembers' Civil Relief Act(SCRA) of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) provides a variety of protections to those serving on active duty in the armed forces of the United States. Many of these protections restrict the rights and remedies of creditors of such Servicemembers.

6. The Act The SCRAentitles the customer to an interest rate of no more than 6% per annum during the period of military service and for up to one year thereafter. Also SCRA entitles protections from repossession, default judgments, and credit bureau reporting. To qualify for SCRA protection the loan must have been consummated (signed) prior to the customer becoming a State or Federal active duty Servicemember. Also borrower has to submit a written request and notification of official documentation of active military service to confirm eligibility for the SCRA protection.

7. Who Qualifies? The term Servicemember includes the following persons: • Full-time members of the regular Armed Forces of the United States, which includes the Army, Navy, Air Force, Marine Corps and Coast Guard; • Members of the reserve units of the Armed Forces of the United States, which includes the Army Reserves, Navy Reserves, Air Force Reserves, Marine Corps Reserves and the Coast Guard reserves, when called to active duty; • Members of the National Guard or Air National Guard activated in federal service as members of the Army National Guard of the United States or the Air National Guard of the United States; • Members of the National Guard or Air National Guard called to active duty in hybrid, or Title 32, state/federal status (1) for duty other than regular annual training (2) for more than 30 consecutive days (3) in response to a national emergency declared by the President;

8. Who Qualifies? The term Servicemember includes the following persons: • Members of the National Guard or Air National Guard called to active duty in hybrid, or Title 32, state/federal status (1) for duty other than regular annual training (2) for more than 30 consecutive days (3) in response to a national emergency declared by the President; • All Commissioned Officers on active service with the Public Health Service or National Oceanic and Atmospheric Administration, including activated Reserve Officers of the Public Health Service or National Oceanic and Atmospheric Administration; and • A US Citizen serving with Allied Forces.

9. Persons not covered under SCRAprotection are: • SCRA protection will not be applied if the Servicemember is not contractually obligated for the debt; and • SCRA protection will not apply to (i) anyone who did not sign the contract or (ii) Non-contracted spouses of a Servicemember who is not eligible for protection. • Note, however, that, notwithstanding these exclusions, a court may order that SCRA protections be extended to the spouse or dependent of a Servicemember if the Servicemember’s military service “materially affected” the spouse or dependent’s ability to meet the obligation.

10. What is the process? • All customers claiming eligibility under SCRA must be referred to the SCRA Specialist, who will investigate and confirm eligibility. A written request and notification of official documentation of active military service must be received to confirm eligibility for the interest rate cap and fee moratorium. • The written notice must be provided no later than 180 days after the Servicemembers’ termination or release from active duty status.Contract origination date must precede active duty date to be eligible for the interest rate cap and fee moratorium. Refer to the servicemembers’ formal active duty orders to determine the active duty date or the Department of Defense database if the active duty orders do not show the start date. • Prior to assigning or reassigning account for repossession and prior to attempting repossession DMDC database is checked to determine active duty status.

11. Credit Bureau Reporting and Default on SCRA accounts Credit Bureau Reporting The account should not be negatively impacted due to any financial hardship incurred as a result of active military duty. To avoid negative reporting SCUSA may suppress credit bureau reporting while the Service Member is on active duty. Credit bureau reporting suppression may be extended up to one (1) year, after the end of active duty service Defaulted loan and Repossession Process During active duty and for three months thereafter, SCUSA is prohibited from repossessing vehicle secured by a retail installment contract without a court order and after entering military service, an automobile Retail Installment Contract cannot be terminated for breach of terms (non-performance) that occurred before or during the person’s military service.

12. Collection Calls • Collection Calls are Prohibited while the Service Member is on active duty? • Collection calls to Servicemembers under SCRA protection are strictly prohibited. • No Verbal or Telephone Collection Calls. No collection call can be executed verbally. • No Written Collection Attempts. Written collection attempts via letter, mail, Chat or email are strictly prohibited – including the contracted applicant.

13. Why do we need Power ofAttorney (POA)? Legal Representation or Power of Attorney (POA) – Determine if a legal attorney or person appointed as POA exists for the loan. All POA documents received regarding the application or servicing of an SCRA account, must have the following elements: • Date POA becomes valid. • POA must be executed by the servicemember/applicant. • POA must not be expired. • In addition, when the Servicemember dies, the POA becomes obsolete (POA is no longer enforceable).

14. Interest Rates and Fees Interest rate and fees shall be adjusted on the account for the period of eligibility as required under the legislation. • The amount of interest that can be charged on financial obligations of active duty Servicemembers is limited to 6% unless a court finds that the borrower's ability to pay has not been "materially affected" by service. • The rate limitation is effective upon the commencement date of active duty, regardless of when the creditor is notified. This continues throughout the period of active service. • SCUSA must make appropriate adjustments to the customer's account retroactive to the first day of active duty. • The interest charges in excess of the 6% limit are to be forgiven and cannot be collected after release from active duty.

15. Interest rates andfees (cont.) • The interest rate may remain in effect for 1 year following the termination of service or any part thereof. • Customers who have been granted protection under SCRA must not be charged any service related fees, such as late fees, NSF or Speedpay Fees.

16. Penalties for non-compliance • Both civil and criminal penalties may be imposed. • There is up to $7,500 per day for violations of the law. • Up to $37,500 if resulting from reckless behavior and represents a pattern of misconduct. • Penalties up to $1,375,000 per day against person who knowingly commits a violation and knowingly or recklessly causes a substantial loss to the bank, or benefit to the party.

17. Penalties for non-compliance(cont.) • These penalties involve fines and imprisonment up to one year. • Besides the criminal penalties, the SCRA recognizes private causes of action by Servicemembers for violation of SCRA protections against anyone who interferes with or fails to comply with the equitable relief afforded by the SCRA. • In addition, State Laws may provide additional protections beyond SCRA requirements.

18. What’s Covered - Summary • Some of the objectives covered in the SCRA Compliance Course are: • Understanding the purpose of SCRA • Reviewing penalties for non-compliance • Reviewing Interest Rates and Fees • Reviewing SC USA Requirements

19. To receive proper credit for completing the course, click the “X” in the lower right corner of the screen. You must also complete the end of course quiz.