Chase admits it erred in foreclosing on troops - Army News | News from Afghanistan & Iraq - Army Times

Chase admits it erred in foreclosing on troops

WASHINGTON — Troops serving in Iraq and Afghanistan have faced foreclosure on their homes and illegally high interest rates, witnesses told House lawmakers Wednesday.

A top official from JPMorgan Chase & Co. acknowledged at a hearing before the Veterans’ Affairs Committee that the lender made mistakes affecting thousands of troops and has refunded them for overcharges.

“I hope this is a wake-up call for the entire financial services industry,” said Rep. Jeff Miller, R-Fla., the committee’s chairman. “I have said recently and I will say again now, that our nation’s war fighters and their families should not have to fight to keep their piece of the American dream while they are on foreign ground defending that fundamental right for all of us.”

Other banks have made similar mistakes, according to testimony before the committee. But the extent of those errors wasn’t made clear at Wednesday’s hearing.

Congress began taking steps as far back as 1812 to make sure soldiers wouldn’t suffer financially while serving their country. Under the Servicemembers’ Civil Relief Act, service members may request that interest rates be reduced to 6 percent on loans taken out prior to entering active duty and are not supposed to face foreclosure without banks meeting specirfic requirements.

But according to a lawyer representing service members, problems emerged during recent mobilizations for fighting in Iraq and Afghanistan:

• Marine Capt. Jonathan Rowles was denied a 6 percent interest rate on his 2004 mortgage with Chase Manhattan Mortgage Corp. while on active duty in 2006. Rowles eventually faced threats of foreclosure while he was with Training Squadron 86 in Pensacola in 2008.

• Army Reserve Lt. Col. Sarah Letts-Smith’s California home was foreclosed on while she served in Iraq. JPMorgan Chase, which bought the family’s mortgage company, sold the home in 2009.

• Marine Lance Cpl. Martin Hupfl’s 2007 loan from Chase Auto Finance Corp. on a Dodge Ram truck was terminated and placed with a debt collector while he was in basic training at Jacksonville Naval Air Station. The 12 percent interest rate was never reduced to 6 percent.

“Unlawful foreclosures force families from their homes,” said Richard Harpootlian, a South Carolina lawyer representing the three service members in a class-action case against Chase. “Illegal repossessions strip families of their cars, appliances and other essential household items.”

Stephanie Mudick, JPMorgan Chase’s executive vice president for consumer practices, said the company found that 4,500 service members were charged interest rates above 6 percent and discovered 18 cases in which service members were “improperly foreclosed upon.”

The company has rescinded sales or reached settlements in 12 of the foreclosure cases and has refunded $2.4 million to service members overcharged for interest.

“Before I go further, I’d like to acknowledge to you that we clearly made mistakes here, and that we are working very hard on fixing them,” Mudick said.