SCRA Compliance in Q1 2026: Two Enforcement Actions, a New Rent Threshold, and Military Housing Under Fire

The first quarter of 2026 was the most active period for SCRA enforcement in recent memory. The DOJ filed two enforcement actions in 60 days, the Federal Register published an updated rent protection threshold, and military housing operators faced a new round of litigation.

Here is what happened, why it matters, and what compliance teams should be watching heading into Q2.

Two DOJ Enforcement Actions in 60 Days

S&K Towing: 148 Vehicles Auctioned from Camp Pendleton (March 25)

The DOJ filed suit against S&K Towing, Inc. of San Clemente, California for illegally selling or disposing of 148 vehicles belonging to servicemembers towed from Marine Corps Base Camp Pendleton. The violations occurred between August 2020 and April 2025.

S&K had a contract with Camp Pendleton that required compliance with all federal laws. The company made no effort to verify military status or obtain the court orders required by 50 U.S.C. Section 3958. Some of the vehicles were registered to barracks addresses on the base. Others still contained military uniforms, equipment, and awards when they were auctioned.

When a Military Legal Assistance attorney warned S&K in May 2024 that the company was violating the SCRA, a manager responded: “We do this all the time.” The company continued selling servicemembers’ vehicles after that conversation.

The case is pending in the Central District of California. The DOJ is seeking monetary damages, restitution, and civil penalties.

CarMax: 28 Vehicles Repossessed Without Court Orders (February 23)

CarMax agreed to pay approximately $500,000 to resolve allegations that it repossessed 28 servicemembers’ vehicles without obtaining the court orders required under the SCRA. The settlement included at least $420,000 in compensation to affected servicemembers and a $79,380 civil penalty to the United States.

CarMax is the nation’s largest used vehicle retailer. The settlement required the company to overhaul its SCRA policies, procedures, and training materials.

The Pattern

Both cases involve the same compliance failure: taking adverse action on a servicemember’s property without first checking military status. S&K never verified. CarMax’s verification process had gaps. In both cases, a DMDC check before acting would have prevented every violation.

With these two filings, the DOJ has now brought more than 50 SCRA enforcement actions across two administrations, recovering over $484 million for servicemembers. Current penalties stand at $79,380 per violation for a first offense and $158,761 for subsequent violations (28 CFR Section 85.5, effective July 2025).

2026 SCRA Rent Protection Threshold: $10,542.60

On March 10, 2026, the Federal Register published the annual housing price inflation adjustment for the SCRA’s eviction protection provision.

Under 50 U.S.C. Section 3951, a landlord cannot evict a servicemember or their dependents from a residence during military service without a court order, provided the monthly rent does not exceed the statutory threshold. The 2026 threshold is $10,542.60 per month, effective January 1, 2026.

For context, this threshold started at $2,400 when the SCRA was enacted and is adjusted annually for inflation. At $10,542.60, it covers virtually every rental unit in the country. If you manage residential properties, this protection applies to your tenants.

What property managers need to know:

• The threshold covers monthly rent, not total housing costs
• Eviction of a servicemember or dependent below this threshold requires a court order during active duty
• The protection applies regardless of the reason for eviction, including nonpayment of rent
• Landlords who evict without a court order face civil penalties up to $79,380 per violation

This is a compliance checkpoint. If your property management system does not flag tenants who are active-duty servicemembers before initiating eviction proceedings, you are exposed.

Military Housing Operators Under Pressure

Hunt Military Communities: Three More Families Sue (March 13)

Three military families filed a federal lawsuit against Hunt Military Communities in the Western District of Texas, alleging that homes leased at Randolph Air Force Base were plagued with mold, sewage problems, lead paint, asbestos, structural deficiencies, and pest infestations.

The plaintiffs include Retired Master Sgt. Michael and Angela Kellar, Retired Staff Sgt. Leroy and Shelvella Holmes, and Senior Master Sgt. Matthew and Ashley Eller. Their occupancies spanned from 2017 through 2025. Each family described health symptoms that began or worsened while living in the housing.

Attorney Jim Moriarty, who represents the families, stated: “Off base, this conduct violates Texas law. On base, it’s nearly untouchable.”

These three families join eight others who filed similar lawsuits against Hunt in 2019. One case (the Vinales family) reached a jury trial in 2023, resulting in a $91,000+ award. Three more trials are scheduled for summer 2026.

Why This Matters for SCRA Compliance

Hunt Military Communities manages over 43,000 military housing units across 55 installations. The ongoing litigation highlights a broader pattern: privatized military housing operators face scrutiny from multiple directions simultaneously.

For property managers operating near military installations (or managing military housing directly), the compliance exposure extends beyond the SCRA to include state housing codes, health and safety regulations, and lease obligations. But SCRA compliance remains the federal floor. Evicting a servicemember without a court order, charging prohibited fees, or failing to process lease terminations under Section 3955 triggers DOJ enforcement with penalties that dwarf state-level fines.

Looking Ahead: Q2 2026

Several developments bear watching in the coming quarter:

S.1550 (Improving SCRA Benefit Utilization Act). This bipartisan bill would amend Section 3937 to require that a single servicemember notification triggers the interest rate cap on all of that servicemember’s obligations with the creditor. It advanced through a Senate Armed Services subcommittee by voice vote on February 24, 2026. If it progresses through the full committee and reaches a floor vote, it would significantly expand how creditors must apply rate cap protections.

S&K Towing case progression. The DOJ’s complaint against S&K was filed March 25. With 148 vehicles at issue and the company on record saying “we do this all the time,” this case could produce a significant settlement or consent decree. The outcome will signal how aggressively the DOJ is pursuing towing and storage lien cases.

OCC examination changes. The OCC updated its SCRA Comptroller’s Handbook (Bulletin 2025-36) in November 2025, moving from mandatory SCRA examination cycles to a risk-based supervision approach. While this means fewer routine examinations, the OCC retains authority to examine national banks for SCRA compliance and the updated handbook remains the primary examination reference. With both the CFPB and OCC pulling back on routine SCRA examinations, the DOJ’s enforcement-driven approach carries even more weight.

DOJ/CFPB recommendation uptake. The December 2024 joint letter recommending proactive DMDC screening has not been rescinded. The DOJ continues to enforce against institutions that fail to proactively identify servicemembers. The gap between “recommendation” and “expectation” continues to narrow with every enforcement action.

The Compliance Takeaway

Q1 2026 reinforced a clear trend: the DOJ is pursuing SCRA violations across industries, at increasing scale, and with current-rate penalties. The S&K Towing case (148 vehicles) dwarfs previous towing cases. The CarMax settlement applied the new $79,380 per-violation penalty for the first time. The rent threshold now covers virtually every residential unit in America.

The common thread across every enforcement action remains the same: a company took an adverse action on a servicemember’s property without first checking military status. The fix is the same in every case: screen first, act second.

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