Chase Tries to Fix Military Mishap

February 16, 2011 (Shirley Allen)
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As we previously reported here on January 18th, JP Morgan Chase admitted that it had made mistakes and had improperly overcharged and foreclosed on active duty military families in violation of the Servicemembers Civil Relief Act (SCRA). In an attempt to right their wrong and to show support to our military members, Chase announced that it is launching new programs to help military members, their families and veterans stay in their homes.

The new military programs will include reduced mortgage rates for members covered under the SCRA and enhanced mortgage modifications for active duty military personnel.

A Chase executive, at a U.S. House hearing last Wednesday, apologized for wrongly foreclosing on military families and overcharging thousands for mortgages, as lawmakers weigh whether new legislation is needed to help prevent military personnel from losing their homes and getting hit with high interest rates.

“We failed to comply with aspects of the law,” Stephanie Mudick, executive vice president of J.P. Morgan’s office of consumer practices, told the House Committee on Veterans’ Affairs.

She said the company is embarrassed over the matter, and apologized for the bank’s errors.

Chase also said it would not foreclose on any active military personnels’ homes. If a wrongful foreclosure does occur, the bank would forgive all of that military member’s remaining mortgage debt, the company said. Also, within the next five years, the bank says it plans to donate 1,000 homes to military personnel and veterans.

“This company has a great history of honoring military and veterans, and the mistakes we made on military foreclosures are a painful aberration on that track record,” says Chairman and Chief Executive Jamie Dimon.

A U.S. Marine Corps captain had filed a lawsuit alleging he was overcharged by Chase in violation of the SCRA, which caps interest rates and stops foreclosures for active-duty service members. In January, after conducting an internal audit, Chase acknowledged its mortgage errors.

Chase’s testimony last Wednesday shows the firm has now found more problems, reporting it overcharged 4,500 active-duty military members and wrongly foreclosed on 18.

Lawmakers at the hearing were also concerned that the problem could be rampant, with other banks overcharging military personnel and threatening to take their homes just as the federal government is trying to combat the nation’s foreclosure crisis.

Tags: jpmorgan chase, scra, active duty military members, mortgage modifications, reduced mortgage rates, foreclose, interest rates