Q. Is military boot camp considered to be “active duty” for purposes of the Servicemembers Civil Relief Act (SCRA)?
A. Yes, “active duty” includes any full-time training. SCRA protection (such as the 6% interest rate cap for preservice debt) applies during active duty, which begins on the date service begins, and ends when an individual is “separated” from military service (i.e., is released from active duty or dies while on active duty). Enlisted reservists may receive protection when they receive orders to report for duty.
Q. Must the credit union provide a risk-based pricing notice to a co-signer or guarantor?
A. No. Regulation V (Fair Credit Reporting Act) requires the credit union to provide a risk-based pricing notice when it: (1) uses a consumer report in connection with an application for, or a grant, extension, or other provision of, credit to that consumer that is primarily for personal, family, or household purposes; and (2) based in whole or in part on the consumer report, grants, extends, or otherwise provides credit to that consumer on material terms that are materially less favorable than the most favorable—Regulation V, Section 1022.72(a)(1)-(2).
The credit union doesn’t “grant, extend, or otherwise provide credit” to an individual who acts as the co-signer/guarantor for another person who applies and is approved for credit.
The co-signer/ guarantor only assumes liability if the borrower fails to pay the debt.
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