Lenders Begin Reviewing Foreclosure Procedures Involving Active Duty Servicemembers After Major JP Morgan Chase Screw-Up In Violating SCRA

The Wall Street Journal reports:

• Some of the nation's biggest lenders are double-checking that their home-lending operations haven't broken a law meant to shield military personnel in active service from foreclosure. So far, the lenders say they haven't uncovered any problems like those J.P. Morgan Chase & Co. acknowledged last week.

• But after Chase found it overcharged more than 4,000 active-duty service members and took the homes of 14, in possible violation of the act that caps interest rates and stops foreclosure, lenders say they are making sure they are in compliance. They are also making sure members of the military know to alert them of their status.

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• At issue is the Servicemembers Civil Relief Act, which says loans for active-duty service members can't exceed a 6% annualized interest rate. The law also halts all foreclosure proceedings up until nine months after the service member returns from active duty. The law defines active duty as "full-time" service, including tours and training, and says those who knowingly break the act face prison and fines.

• The issue began to surface when a U.S. Marine Corps captain filed a civil lawsuit in federal court in South Carolina last year, alleging he was overcharged by Chase, and seeking punitive damages.(1) Last week, Chase said it discovered its problems in its own review and is mailing about $2 million to victims; it said it had already moved to correct the foreclosures.

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• Richard Harpootlian, the lawyer for South Carolina Marine Capt. Jonathan Rowles, said more potential victims from all over the country, including some who aren't customers of Chase, have contacted him since last week. The suit is seeking class-action status.

For more, see Lenders Step Up Reviews of Military Foreclosure Practices (requires paid subscription; if no subscription, GO HERE, then click appropriate link for the story).

Go here for more on the rights under the Servicemembers Civil Relief Act.

(1) See Marine shows willingness to fight for what's right.