Friday, February 11, 2011

Support Our Troops? Nah, screw 'em

There is a US Federal law that offers certain legal protections to military personnel and their families against the usual rude intrusions of civilian life. It's called the The Servicemembers' Civil Relief Act. See this and this.

The Big Banks, which the troops seemingly protect don't always return the favor, or care about the law -- until, that is, they get caught. This is true, or so it seems, about JP Morgan and BofA, from the looks of these stories:

New Program to Help Military Homeowners, Bank of America Announces
I received an email last month from Sgt. Keith Oliver – a soldier currently deployed in Iraq. He told me that after Bank of America had reduced his payments for two years the bank suddenly came back and said he owed about $19,000 or else he would face foreclosure.

He kept calling the bank to explain he was deployed but Oliver said he bounced from one department to another until finally he contacted us at “GMA” to ask for help.

When we called Bank of America it quickly realized the error and fixed the situation with Oliver.

Bank of America announced this morning on “GMA” that it will help members of the military who have trouble meeting their mortgage payments by creating a new program to assist those active duty soldiers.

“What we’re going to do is set up a program of our own that allows us to reduce their principal if they get in trouble, extend their payments, bring their rates down,” Larry DiRita, a spokesman for Bank of America, said.

“Our goal is, look, if you are a military person, you are deployed, you don’t need to be worrying about your house. If you do find yourself in a distressed situation let us know and we will start working with you right away,” he told me.

Chase spends $2M to fix errors on military mortgages
Marine Capt. Jonathon Rowles, now assigned to South Korea, alleges Chase committed a number of violations, including failing to give the proper effective date of the interest rate reduction, repeatedly requiring him to re-apply for protections, and trying to collect on inaccurate account balances.

Rowles alleged that Chase Home Finance, a subsidiary of JPMorgan Chase, failed to reduce his interest rate to 6% on the effective date of his active-duty status and required him to re-apply for protections no less than four times a year after that. He also alleges that starting in April 2009, Chase tried to collect "an inaccurate account balance" resulting from "its own systemic errors in servicing the loan," according to the lawsuit, filed July 6 in U.S. District Court in Beaufort, S.C.

Chase has advertised itself as a military-friendly bank since at least 2005, when it began touting its Home Finance Military Mortgage program, which offers a discount on closing costs in home purchases or refinancing for military members and retirees.

Bank ends student loan deferrals for troops, then reverses decision
the bank was contacted by the wife of a soldier serving in Afghanistan, and she was told the bank decided in December to stop allowing active-duty troops to delay paying their student loans.

"They informed me that they are no longer deferring private student loans for active duty military personnel," said Kerri Napoli, whose husband, Army Pfc. Andrew Napoli, is now serving near Kandahar.

After repeated conversations with Chase, Napoli says she told the bank last month that she had contacted NBC News. The next day, she says, the bank told her it would grant her husband an exception to the new policy and defer his loan.

The bank also has had second thoughts about ending a program aimed at helping U.S. troops with their family finances. After NBC News contacted the bank about why it had stopped allowing deferred payments, a Chase official said that decision was being reversed and the program would be reinstated.

J.P. Morgan Apologizes for Military Foreclosures
A J.P. Morgan Chase & Co. executive, at a U.S. House hearing 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.

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

But lawmakers didn't sound satisfied. In a heated exchange, California Rep. Bob Filner, the top Democrat on the panel, made it clear he doesn't think an apology is enough.

"You broke the law. How are we going to hold you accountable?" Rep. Filner said. "Everything is impersonal. Nobody is ever responsible and yet these people's lives are turned upside down. You can't just apologize...and then, this is over."

Chase initially found it overcharged at least 4,000 military personnel in active service and took the homes of 14. However, Chase's testimony Wednesday shows the firm has now found more problems--it said it overcharged 4,500 active-duty military members and wrongly foreclosed on 18.

Lawmakers at the hearing voiced concern that Chase, a company that received funds from the government's 2008 financial-industry government rescue program, would have made such errors. They 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.

Banks reminded on military personnel protections
Holly Petraeus, wife of Gen. David H. Petraeus, the top American military commander in Afghanistan, pointed the firms to the Servicemembers Civil Relief Act, which limits the interest rates that banks can charge those in the military and prevents them from foreclosing on homes of active duty service members without a judge's expressed authorization and a formal hearing where the homeowner is represented.

The recently-tapped head of military issues for the new Consumer Financial Protection Bureau, sent a letter to the nation's 25 largest banks Tuesday urging them to comply "with important legal protections for military personnel."

Elizabeth Warren, the Harvard law professor helping to set up the new consumer watchdog, appointed Petraeus to the post early last month.
Chase's people are trying to spin the story down a few notches. Forget the harassment and foreclosures. There really isn't all that much money at issue here, is their subliminal message, reported the the WSJ article noted above:
Stephanie Mudick, executive vice president of J.P. Morgan's office of consumer practices, told the House Committee on Veterans' Affairs the bank has so far sent the 4,500 overcharged service members $2.4 million including interest, and the median payment has been $70 plus interest.
Chump change.

Chumps, indeed.

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