Chase Wrongfully Forecloses on Military Families, Overcharges Soldiers
[Post updated] JP Morgan Chase admitted it overcharged thousands of military men and women. The company also admitted that it wrongfully foreclosed on 14 active duty service families. Federal law protects active duty military personnel from high interest rates and foreclosures.
“Soldiers who are fighting on the front lines to protect our country shouldn’t have to needlessly fight with banks to protect their homes,” said Rhode Island Senator Jack Reed. He asked the attorney general’s office to examine the incidents for possible federal prosecution.
Other states have now begun investigating whether other mortgage companies have also violated state and federal foreclosure laws. Apparently violations are widespread. Complaints have been pouring in from servicemen about Chase, Countrywide/Bank of America, HSBC, Capital One and others.
The Servicemembers Civil Relief Act and many states limit the interest rates that can be charged to active duty soldiers. Servicemen and women are deployed are also protected from foreclosures until they return.
For its part, Chase has admitted overcharging over 4000 military families and has pledged to mail refund checks. Fixing the problem for the 14 families that lost their home may be more difficult. One soldier said that not only did Chase foreclose on his home while he was on active duty, the resulting financial loss forced him into bankruptcy. It is one thing to mail a refund check but quite another to restore someone’s home, peace of mind and credit standing.
Numerous lawsuits have been filed and more are expected.
If you are the subject of a foreclosure action, seek legal help as soon as possible. In many instances an experienced lawyer can help you modify your loan, work out a short sale (selling the property for less than one is owed) or raise defenses to the bank’s actions.
Update: In April, JPMorgan Chase agreed to pay $27 million to settle charges that overcharged active duty servicemembers. The settlement requires the bank to pay $12 million as damages to the approximately 6,000 service members covered by the class action suit. The bank also must set aside a $15 million fund for additional individual damages. That fund will be administered by an independent third party.
In 2015, the U.S. Department of Justice settled with the five largest mortgage servicers including Chase. The other banks involved included Wells Fargo Bank N.A. and Wells Fargo & Co. (Wells Fargo); Citi Residential Lending Inc., Citibank, NA and CitiMortgage Inc. (Citi); GMAC Mortgage, LLC, Ally Financial Inc. and Residential Capital LLC (GMAC Mortgage); and BAC Home Loans Servicing LP formerly known as Countrywide Home Loans Servicing LP (Bank of America). Under the terms of that settlement, the five named banks are collectively paying $123 million to military members harmed by the banks.
Chase’s portion of the settlement was $31 million.
In announcing the settlement, a senior Justice Department official said, ““These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes. While this compensation will provide a measure of relief, the fact is that service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country. The department will continue to actively protect our service members and their families from such unjust actions.”
Case History: Sgt James Hurley – Disabled Veteran
While these settlements are a step in the right direction, the national headlines don’t tell the entire story. Mailing checks to soldiers long after their homes were illegally foreclosed and sold is little consolation. Let’s look at one of almost 1000 military members who rights under the Servicemembers Civil Relief Act (SCRA).
Sgt Jim Hurley was an Army reservist who deployed to Iraq. While he was fighting for our freedom, JPMorgan Chase illegally foreclosed on his home. The SCRA is clear but that didn’t stop Chase. His wife Brandie and their two little kids were left on the street.
Sgt Hurley was wounded and returned as a disabled veteran. But two months before he returned from war his home was gone. It took a five year legal fight before a federal judge ruled that the bank was wrong. Unfortunately, the battle didn’t end there. Both Deutcshe Bank (the lender) and the loan servicer, Saxon Mortgage Services (a JPMorgan Chase subsidiary) couldn’t agree on damages.
The banks simply wanted to right a check for the equity in the home. Sgt Hurley, however, said his damages were far greater. For years his family struggled with no secure future or roof over their head. He also claimed that his credit had been impaired by the foreclosure.
Summary of Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act (SCRA) applies to all active duty military members. Reservists and National Guard members are covered while serving under active duty orders. Generally eligibility for the law’s protections ceases within 1 to 3 months after discharge from active duty. With some limitations, it also applies to family members.
The SCRA was enacted by Congress in 2003. Previously it was known as the Soldiers’ and Sailors’ Civil Relief Act. The purpose of the law is to protect servicemembers while servicing the nation. Congress says the law is necessary so that our soldiers can “devote their entire energy to the defense needs of the Nation.”
Protections under the Servicemembers Civil Relief Act
While this post primarily discusses foreclosures while a military member is on active duty, there are many protections within the Act. These include:
Mortgage interest rates
Lawsuit and judgments
Credit card interest rates
Cellular service provider contracts
Termination of rental agreements (including eviction protections)
Termination of automobile leases
Cancellation of certain insurance policies
Protection for small business owners
Mahany Law is a full service, national boutique law firm that sues banks, lenders and mortgage servicers. We regret that we are unable to handle individual homeowner cases. (We do consider class action cases and in exceptional cases will accept a wrongful foreclosure case involving an active duty servicemember.) For more information contact us online or by email
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