An extra $9 million in interest is being paid by military reserve and National Guard members because they are not receiving rights under federal legislation reducing the rates they may be charged, the federal consumer financial protection agency charged Wednesday.
According to the Consumer Financial Protection Bureau (CFPB), research the agency has conducted shows that reserve and National Guard members called to active duty are paying the extra interest every year because they are not always receiving the benefit of their right to rate reductions under the Servicemembers Civil Relief Act (SCRA).
The SCRA, according to the bureau, gives servicemembers on active duty the right to request interest rate reductions on outstanding loans during the time they are activated and for an additional year in the case of mortgages.
CFPB contends that its research shows only small groups of activated guard and reserve servicemembers receive interest rate reductions, and those who serve in active-duty status are not receiving the reductions at all.
“Financial institutions can take steps to ensure these individuals can more easily assert their rights,” the bureau stated in a press release. “The SCRA interest rate cap is more salient given rising interest rates on consumer credit.”