Military member holding miniature houseLenders and servicers seeking to comply with the Servicemembers’ Civil Relief Act (SCRA) who depend on the commonly used Defense Manpower Data Center (DMDC) database have a little more comfort now on the accuracy of their searches than they may have had years ago, but there are still “known issues and gaps” with the data according to a recent report to Congress. The Report to Congress on the DMDC and Military Lending Act (MLA) reflected that the DMDC continues to seek mechanisms to improve the accuracy of the data.

From years past, it was an oft-heard cry of foul from lenders or servicers who would run a check on the DMDC website as the only means they had to check the military status of a borrower, only to learn later that the status of a borrower was not accurate. I personally encountered situations where we had military orders in hand but the DMDC did not reflect any active duty service, and I even recall one of my colleagues who had been active duty Navy for years performing a search on himself that came up empty. It should be recognized that neither the SCRA nor the MLA require the DMDC to be used, but the DMDC is the Department of Defense source for companies seeking to ascertain the military status of an individual and comply with the federal statutes. An alternative to the DMDC is the commercial website Servicemembers Civil Relief Act Centralized Verification System.

While the report chronicles the dedicated efforts of the Department of Defense employees managing the DMDC, noticeably absent are any statistics or figures as to the actual accuracy of the system. That may be in large part because the system “does not know what it does not know,” and we are left with only anecdotal experiences where users knew the data was not 100 percent accurate, but just did not know exactly how inaccurate. The report recognizes that there are known “gaps” in the DMDC data, including delayed reporting of activations and separations, missing non-contingency active service events, missing separation and characterization codes, maintenance of the projected active service end date, and incomplete reporting of activation periods shorter than 30 days. But the report goes on to note that the DMDC is working closely with the service branches to correct those discrepancies and develop root cause
analyses to determine which issues still exist, and that the data concern is mitigated by a mysterious and non-descript “DMDC business process which provides an alternate mechanism for changing the eligibility codes in the service member’s DEERS record.”

The DMDC draws its information from the Defense Enrollment Eligibility Reporting System (DEERS) for eligibility determinations. An individual is enrolled in the DEERS system when he or she first joins the military. The Active Duty and Reserve components of each of the military services are required to report active service periods for their members to the DMDC, and the data inputs are reported on a daily basis. It is often the Reserve and National Guard components that are most likely to have inaccurate data.

The report covers many other subject matters related to the DMDC, but the overall takeaway for lenders and servicers is that while the DMDC is not infallible, its operators are working diligently to provide the most accurate data possible. The Department of Defense obviously wants to provide accurate data so that military members can receive the protections provided under the SCRA and MLA. When researching the military status of a borrower, lenders and servicers want reliable information when proceeding toward a foreclosure or default judgment or evaluating an interest rate protection that should be a standard part of a company checklist. Further, a servicer or financial institution that researches the military status of a military borrower should document their search for potential “safe harbor” defenses should an issue ever arise in a foreclosure, interest rate reduction, or default judgment. We are available for questions or concerns relating to SCRA and MLA compliance.