Sec. 103. Prohibition on collection of penalties for early prepayment of mortgage
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Section 203 of the Servicemembers Civil Relief Act ( 50 U.S.C. App. 523 ) is amended by adding at the end the following new subsection: When a servicemember discharges an obligation arising under a mortgage contract and would otherwise thereby incur a prepayment penalty, such penalty shall not accrue if— the servicemember is in military service at the time the prepayment penalty is incurred; and the reason the servicemember discharges the obligation, thereby incurring the penalty, is materially affected by such military service.
For purposes of paragraph (1)(B), the requirement that the reason a servicemember discharged a mortgage obligation, thereby incurring a prepayment penalty, be materially affected by military services requires— that the mortgage be secured by the servicemember's primary residence; and that the servicemember receive permanent change of station orders. An assessment of a penalty in violation of this subsection shall be considered a violation of this Act for purposes of title VIII. .