Compliance with SCRA

The Government Accountability Office (GAO) released a report examining Servicemembers Civil Relief Act (SCRA) compliance at the four federal banking regulators.

The study found significant differences across the four federal banking agencies with regard to reviewing for SCRA compliance.

According to the report, "both FDIC and Federal Reserve reviewed a significantly higher percentage of institutions for SCRA compliance compared with NCUA and OCC. It also shows that OCC reviewed a greater percentage of institutions than NCUA."

The report estimates that FDIC examined 99.9 percent of depository institutions that serviced mortgages for SCRA compliance between 2007 and 2011. The Federal Reserve examined an estimated 92.7 percent of depository institutions for SCRA compliance. The OCC came in at 20.3 percent. And the NCUA examined 0.02 percent of federal credit unions for SCRA compliance.

In explaining the agency's abysmally low compliance review rate, NCUA officials told GAO "that the agency does not have a separate consumer compliance examination function and that consumer compliance is part of its overall evaluation of the safety and soundness of institutions. The officials said that given the recent economic crisis, the agency has placed more focus on the safety and soundness of credit unions than on compliance with consumer regulations."

However, GAO wrote that its prior work found that mortgage servicing problems have led to safety and soundness issues at depository institutions.

NCUA’s Executive Director agreed with GAO that additional testing of loan files would provide greater assurance of SCRA compliance. According to David Marquis, NCUA has made recent changes to its examination process to raise the importance of consumer protection issues. Starting in 2011, staff separate from safety and soundness examiners would review the lending practices of federal credit unions to ensure compliance with SCRA. Further, NCUA is incorporated reviews for SCRA compliance into its analysis and investigations of complaints.

Read the report.