[Congressional Record (Bound Edition), Volume 157 (2011), Part 1]
[Extensions of Remarks]
[Pages 513-514]
[From the U.S. Government Publishing Office, www.gpo.gov]




            BANK OVERCHARGED MILITARY FAMILIES ON MORTGAGES

                                 ______
                                 

                        HON. DENNIS J. KUCINICH

                                of ohio

                    in the house of representatives

                      Wednesday, January 19, 2011

  Mr. KUCINICH. Mr. Speaker, admitting some ``very big mistakes,'' 
banking giant JP Morgan Chase revealed today that they overcharged more 
than 4,000 active-duty military personnel on their home loans and 
foreclosed, in error, on 14 of them.
  The Service Members Civil Relief Act of 2003 provides military 
personnel certain rights and protections as they enter active duty with 
respect to credit card interest rates, mortgage interest rates, and 
mortgage foreclosures. Per the provisions of this act both mortgage 
interest rates and consumer debt interest rates can be limited to 6 
percent in some circumstances and foreclosures are not permitted.
  While Chase has apologized for this ``customer mistake,'' has agreed 
to send out $2 million worth of refunds and has resolved all but one of 
the foreclosure cases, the strain put on the service members and their 
families through the bank's failure to comply with this act is 
inexcusable.
  Two issues need urgent attention if we are to avoid a recurrence of 
this kind of illegal behavior on the part of the banks: 1) We must

[[Page 514]]

accelerate the formation of the new Consumer Financial Protection 
Bureau that was created by Congress in the wake of the financial 
crisis; 2) We need to acknowledge that current interest rates are 
running as low as 4.6 percent for fixed 15 year loans and look into 
amending the Service Members Civil Relief Act of 2003 to reflect that 
reality, thus giving those who leave their families behind to serve our 
country the best rates available.

                     [From NPR.org, Jan. 19, 2011]

            Bank Overcharged Military Families on Mortgages

                           (By Tamara Keith)

       The banking giant JPMorgan Chase is admitting it made some 
     very big mistakes. As first reported by NBC News, the firm 
     says it overcharged more than 4,000 active-duty military 
     personnel on their home loans and foreclosed in error on 14 
     of them.
       Julia Rowles and her husband, Marine Capt. Jonathan Rowles, 
     have been fighting with Chase ever since Rowles was 
     commissioned as an officer in 2006.
       ``They would say, `We will take your house. We will report 
     you to the credit agency. This is a bad situation that you 
     don't want to be getting into. Pay us today.' They were 
     harassing us for money that we did not owe them,'' Julia 
     Rowles says.
       Her husband once got a collection call at 3 a.m. None of 
     that was supposed to happen. Under a federal law called the 
     Servicemembers Civil Relief Act, most troops can get their 
     mortgage interest rates reduced to 6 percent while on active 
     duty, and foreclosures aren't allowed. Rowles says her 
     husband, who is now overseas, was granted the lower interest 
     rate, but Chase didn't adjust its records.
       ``They kept still charging us 9 and 10 percent, and we were 
     paying upwards to $2,000 when we should have only been paying 
     $1,400,'' she said.
       This week Chase said it would send out $2 million worth of 
     refunds to 4,000 active-duty customers like the Rowles family 
     who were overcharged. It also admitted to wrongfully 
     foreclosing on 14 homes, and said all but one of those cases 
     had been resolved. Bank officials declined an interview 
     request, but in a statement said: ``While any customer 
     mistake is regrettable, we feel particularly badly about the 
     mistakes we made here.''
       But attorney Dick Harpootlian in Columbia, S.C., isn't 
     ready to accept the apology. He's one of the lawyers 
     representing the Rowles family in what he hopes will become a 
     class-action lawsuit against Chase.
       ``I was a prosecutor for 12 years. Everybody that got 
     caught taking money that wasn't theirs always said they were 
     sorry, offered to give it back and call it even,'' he said. 
     ``And that's just not what ought to happen in cases like 
     this.''
       Elizabeth Warren, a special assistant to President Obama, 
     says the case illustrates why the U.S. needs a strong 
     consumer financial protection agency. She's putting together 
     the new Consumer Financial Protection Bureau that was created 
     by Congress to look out for consumers in the wake of the 
     financial crisis. The agency will also focus on protecting 
     military families.
       ``We need a cop on the beat,'' Warren said. ``The laws are 
     in place, but there's no one to enforce them and no one to 
     speak up for these families. This is just wrong.''
       Warren says the laws exist so service members can 
     concentrate on doing their jobs.
       They should not be ``worried about paperwork and bills and 
     whether or not a loved one is being harassed for money that's 
     not even owed.''
       Warren visited Lackland Air Force Base in Texas on Tuesday 
     to talk to military families about their financial concerns. 
     She was joined by Holly Petraeus, the wife of Gen. David 
     Petraeus, the commander of U.S. forces in Afghanistan.
       Holly Petraeus was one of the first hires for the new 
     consumer bureau.
       ``I really can't think of anything better to be doing while 
     my husband is deployed forever than working on a project like 
     this,'' she said.
       She'll head the office of Service Member Affairs, which 
     will be on the lookout for issues like those at Chase.
                                  ____


             Servicemembers Civil Relief Act (SCRA) of 2003

  Mortgage Interest Rate Reduction for Active Duty Military Personnel

       This federal law (formerly known as The Soldiers' and 
     Sailors' Civil Relief Act of 1940) provides military 
     personnel important rights and protections as they enter 
     active duty, on issues that include mortgage interest rates, 
     mortgage foreclosure, and credit card interest rates. A major 
     benefit is the ability to reduce mortgage interest rates and 
     consumer debt interest rates (including debts incurred 
     jointly with a spouse) to a 6% limit under certain 
     circumstances. The mortgage or debt must have been incurred 
     before entry into active military service, and the 
     servicemember must show that military service has had a 
     ``material effect'' on the legal or financial matter 
     involved. This provision applies to both conventional and 
     government-insured mortgages.
       SCRA applies to active duty military personnel who had a 
     mortgage obligation prior to enlistment or prior to being 
     ordered to active duty. This includes members of the Army, 
     Navy, Marine Corps, Air Force, Coast Guard; commissioned 
     officers of the Public Health Service and the National 
     Oceanic and Atmospheric Administration who are engaged in 
     active service; reservists ordered to report for military 
     service; persons ordered to report for induction under the 
     Military Selective Service Act; and guardsmen called to 
     active service for more than 30 consecutive days. In limited 
     situations, dependents of servicemembers are also entitled to 
     protections.
       The mortgage interest rate limit is not automatic. To 
     request this temporary interest rate reduction, you must 
     submit a written request to your mortgage lender and include 
     a copy of your military orders. The request may be submitted 
     as soon as the orders are issued but must be provided to your 
     mortgage lender no later than 180 days after the date of your 
     release from active duty military service. When you contact 
     your mortgage lender, you should provide the following 
     information: notice that you have been called to active duty; 
     a copy of the orders from the military notifying you of your 
     activation; your FHA case number, if applicable; evidence 
     that the debt precedes your activation date.
       When notified that you are on active military duty, your 
     mortgage lender must reduce the interest rate to no more than 
     six percent per year during the period of active military 
     service, recalculate your payments to reflect the lower rate, 
     advise you of the adjusted amount due, provide adjusted 
     coupons or billings, and ensure that the adjusted payments 
     are not returned as insufficient payments. If a mortgage 
     lender believes that military service has not affected your 
     ability to repay your mortgage, they have the right to ask a 
     court to grant relief from the interest rate reduction, but 
     this action is not common.
       Interest in excess of 6 percent per year that would 
     otherwise have been charged is forgiven. However, the 
     reduction in the interest rate and monthly payment amount 
     only applies during the period of active duty. Once the 
     period of active military service ends, the interest rate 
     will revert back to the original interest rate, and the 
     payment will be recalculated accordingly.
       If you cannot afford to pay your mortgage even at the lower 
     rate, your mortgage lender may allow you to stop paying the 
     principal amount due on your loan during the period of active 
     duty service. Lenders are not required to do this, but they 
     generally try to work with service members to keep them in 
     their homes. In such a case, you would still owe this amount 
     but would not have to repay it until after your complete your 
     active duty service.
       Furthermore, mortgage lenders may not foreclose, or seize 
     property for a failure to pay a mortgage debt, while a 
     service member is on active duty or within 90 days after the 
     period of military service unless they have the approval of a 
     court. In a court proceeding, the lender would be required to 
     show that the service member's ability to repay the debt was 
     not affected by his or her military service.
       Servicemembers who have questions about the SCRA or the 
     protections that they may be entitled to may contact their 
     unit judge advocate or installation legal assistance officer. 
     Dependents of servicemembers can also contact or visit local 
     military legal assistance offices where they reside. A 
     military legal assistance office locator for each branch of 
     the armed forces is available at the Armed Forces Legal 
     Assistance (AFLA) website.
       Most lenders have other programs to assist borrowers who 
     cannot make their mortgage payments. If you or your spouse 
     find yourself in this position at any time before or after 
     active duty service, contact your lender immediately and ask 
     about loss mitigation options. Borrowers with FHA insured 
     loans who are having difficulty making mortgage payments may 
     also be eligible for special forbearance and other loss 
     mitigation options.

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