OFF THE WIRE
Bankers “Wrongly Foreclosed On 14 Active-Service Military Families And Overcharged Thousands More”
JANUARY 22, 2011 By DAVID BENOIT, Wall St. Journal [Excerpts]. Alan Zibel contributed to this article.
NEW YORK—J.P. Morgan Chase & Co. admitted that it wrongly foreclosed on 14 active-service military families and overcharged thousands more on their mortgages, a continuing internal bank review has found.
The bank said about a year ago it launched the internal audit and found it made mistakes when accounting for active military service under the Servicemembers Civil Relief Act.
That law says active-duty military families’ interest rates on homes can be no more than 6%, and they aren’t subject to the delinquency process including foreclosures.
The bank said it is in the process of refunding about $2 million to more than 4,000 families that were overcharged. The bank said some refunds were only for minor fees, and it has quickly resolved 13 of the 14 foreclosures.
But the bank’s payments don’t put related legal woes behind it. And politicians were quick to seize on the mistake as evidence of a more troubled foreclosure system.
Sen. Jack Reed (D., R.I.) said Tuesday he asked Attorney General Eric Holder to examine the issue. “Soldiers who are fighting on the front lines to protect our country shouldn’t have to needlessly fight with banks to protect their homes,” Mr. Reed said in a statement.
The payment doesn’t stop a lawsuit filed by one service member in a South Carolina federal court who alleges the bank violated the act.
Richard A. Harpootlian, an attorney for U.S. Marine Capt. Jonathan Rowles, said returning the money isn’t enough. He said the lawsuit, which seeks class-action status, is trying to obtain punitive damages as well.
The mistakes were earlier brought to light by NBC News, when Capt. Rowles discussed his fight with the bank.
Mr. Harpootlian also said J.P. Morgan lawyers said in a hearing that federal prosecutors are looking into the incident and, separately, that he received an inquiry from a congressional committee.
The latest situation is likely to be particularly embarrassing to Chief Executive James Dimon, who has repeatedly touted the bank’s policies in dealing with military personnel, particularly the fact that the bank pays the salaries of employees who are called to military duty. In November, Mr. Dimon vowed to hire more military veterans.
God, grant me the strength of eagles wings,
the faith and courage to fly to new heights,
and the wisdom to rely on his spirit to carry me there.
