One of the nation's biggest banks — JP Morgan Chase — admits it has overcharged several thousand military families for their mortgages, including families of troops fighting in Afghanistan. The bank also tells NBC News that it improperly foreclosed on more than a dozen military families.
The admissions are an outgrowth of a lawsuit filed by Marine Capt. Jonathan Rowles. Rowles is the backseat pilot of an F/A 18 Delta fighter jet and has served the nation as a Marine for five years. He and his wife, Julia, say they’ve been battling Chase almost that long.
The dispute apparently caused the bank to review its handling of all mortgages involving active-duty military personnel. Under a law known as the Servicemembers Civil Relief Act (SCRA), active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure. Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they’re in harm's way.
A Chase official told NBC News that some 4,000 troops may have been overcharged. What’s more, the bank discovered it improperly foreclosed on the homes of 14 military families.
“We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here,” Chase chief communications officer Kristin Lemkau said in a statement to NBC News.
She said that beginning this week Chase will be mailing a total of about $2 million in refunds to families that may have been overcharged. She says most of the families improperly foreclosed on have gotten or will get their homes back. A bank official described what happened here as “grim,” but emphasized the mistakes were inadvertent, not malicious.
When it comes to foreclosures happening within the military community, there is no excuse for JP Morgan-Chase to not understand the longstanding protections given to military members through laws of the SCRA. The fact is, the SCRA has roots going back to the Civil War.
The history of the Servicemembers Civil Relief Act (SCRA):
The Servicemembers Civil Relief Act (SCRA) is formerly known as "Soldiers' and Sailors' Civil Relief Act (SSCRA). Despite the act's official title (SSCRA) dating back 1940, its origins can be traced as far back as the Civil War when Congress passed a total moratorium on civil actions brought against Union soldiers and sailors. In basic terms, this meant that any legal action involving a civil matter was put on hold until after the soldier or sailor returned from the war. Examples of civil matters included breach of contract, bankruptcy, foreclosure or divorce proceedings.
The SSCRA was largely unchanged from its enactment in 1940. On December 19, 2003, President Bush signed into law the new-and-improved Servicemembers Civil Relief Act (SCRA). This law is a complete revision of the SSCRA but clarified the language, incorporated many years of judicial interpretation, and updated the SSCRA to reflect new developments in American life since 1940.
In other words, it was simplified.
The most recent amendment to the SCRA to provide foreclosure protection to servicemembers occurred in section 2203 of the Housing and Economic Recovery Act of 2008.
Ignoring the protections of the SCRA is not only wrong, it is punishable by law with fines or imprisonment.
Why did it take five years in a courtroom setting for JP Morgan-Chase to finally decide to take the protections of the SCRA seriously?
Because foreclosures are big business. It was all a part of their cost of doing business. Without being held accountable for their actions, it was also worth the risk.
Most servicemembers have better things to do with their time and energy than to fight a 5-year court battle. They would rather remain busy serving their country. Besides, one battlefield is more than enough.
JP Morgan-Chase was probably hoping for that.
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