Does the Servicemembers Civil Relief Act (SCRA) apply to a servicemember’s rental property, or does it apply only to a primary residence? We have a loan secured by residential property owned by a servicemember but rented out to a non-servicemember.

Yes, the SCRA’s mortgage foreclosure protections apply to rental properties. The SCRA’s stay of foreclosure proceedings and other mortgagor protections apply to “an obligation on real or personal property owned by a servicemember” that is secured by a mortgage and was originated before the servicemember entered into military service. These protections are not limited to a servicemember’s primary residence and apply to business purpose loans, as the Federal Reserve Bank of Philadelphia confirmed in a 2013 webinar Q&A.

Similarly, the Illinois Service Member Civil Relief Act’s foreclosure protections apply regardless of the purpose of the loan or the nature of the property securing the loan.

For resources related to our guidance, please see:

50 USC App. 533 (“This section applies only to an obligation on real or personal property owned by a servicemember that — (1) originated before the period of the servicemember’s military service and for which the servicemember is still obligated; and (2) is secured by a mortgage, trust deed, or other security in the nature of a mortgage.”)

FRB Philadelphia, SCRA Webinar Questions & Answers (First Quarter 2013) (“12. Do foreclosure rules apply only to the service member’s primary residence, or do they apply to all loans secured by a mortgage on a residence? Does it matter if the loan is for business purposes? The SCRA’s foreclosure protections in section 533 apply to any obligation on real or personal property owned by a service member that is secured by a mortgage, trust deed, or other security in the nature of a mortgage. The obligation must have been originated before the service member’s military service, and the service member must still be obligated on it. The statute applies to loans for business purposes and loans secured by the service member’s residence, even if it is not the service member’s primary residence.”)

Illinois Service Member Civil Relief Act, 330 ILCS 63/70 (“Foreclosure and a judicial sale pursuant to a foreclosure against a service member who has entered military service in conjunction with a mortgage agreement entered into before the mortgagor entered military service and on or after the effective date of this Act is subject to Section 15-1501.6 of the Code of Civil Procedure.”)

Illinois Code of Civil Procedure, 735 ILCS 5/15-1501.6(b) (“In an action for foreclosure, a mortgagor who is a service member that has entered military service for a period greater than 29 consecutive days or any member of the mortgagor's family who resides with the mortgagor at the mortgaged premises, if the mortgagor entered into the mortgage agreement before the mortgagor received orders for military service on or after the effective date of this amendatory Act of the 97th General Assembly, may file a motion for relief . . . .”)