RESERVISTS CALLED TO DUTY MUST GET LOWER INTEREST RATES ON LOANS, MORTGAGE

CAPE GIRARDEAU -- A federal law, which has been on the books for years, offers some financial relief for military reservists called to active duty and their families.

But few people know about it, said Ken McManaman, a Cape Girardeau attorney and Naval Reserve officer.

The law dates back to 1918. A key provision of the law, dealing with interest rates, was added in October 1940 and amended in 1942, he noted.

"The act has never been used very much," McManaman said Tuesday.

In the past it has been used primarily in divorce cases involving military personnel. One provision of the law is that no legal judgment can be taken against a serviceman or woman without an attorney being provided to represent the absent serviceman.

The provision, however, has become little more than a formality in such cases, with the person initiating the divorce action hiring an attorney to go through the motions as the legal representative of the other spouse.

"It's kind of a joke," said McManaman.

But with a large number of reservists being called to active duty because of the Persian Gulf crisis, the law may come into play more now than ever before, he pointed out.

"It was started basically to help active duty personnel, but it's become more important from the reservist standpoint," he explained.

A key provision of the law states that a reservist, who is called to active duty, doesn't have to pay more than 6 percent interest on his or her debts while serving on active duty.

That provision applies to such things as mortgages and credit-card debt, McManaman said.

The law, however, doesn't have any teeth in it, he maintained. The act provides "a right without a remedy."

McManaman said that there is no penalty for banks and others who might violate the law.

If a bank, for example, refuses to lower the interest rate on a home mortgage, the reservist and his or her family have to hire an attorney and go to court in order to take advantage of the benefits allowed under the law, McManaman said.

He said he is aware of a couple of instances recently where banks originally said they would not lower interest rates on debts for Naval reservists called to active duty.

The banks, however, subsequently agreed to lower the interest rates being charged after McManaman wrote letters to the institutions informing them about the law.

McManaman said Congress needs to amend the law to make it easier to enforce.

Area reservists, who have been called to duty in the Persian Gulf as part of Operation Desert Shield, have been informed of the federal law, McManaman said.

McManaman has offered to write letters to the creditors of the area Navy reservists called to active duty in an effort to see that the creditors follow the law.

He advised families of reservists, who have already departed for the gulf without making such arrangements, to contact their Naval Reserve Center if they want the letters written.

McManaman said families need to submit certain information for the letters. The needed information includes the name, rank, social security number, date of birth and address of the reservist. In addition, they should submit the names, addresses and account numbers of creditors.