John D. Copeland
U.S. forces in the Middle East constantly face the dangers of serious injury or death. Even small distractions endanger their lives and the lives of those serving with them.
Unknown to most Americans, mortgage banks distract thousands of our active duty service men and women with illegal mortgage interest rates and threats of foreclosures.
Already in trouble for illegally foreclosing on thousands of homes without proper documentation, the banks must now contend with a new scandal of shamefully abusing the rights of U.S service men and women on active duty in the Middle East.
JP Morgan Chase, Citigroup, Wells Fargo, Deutsche Bank and Morgan Stanley’s Saxon Mortgage Services allegedly overcharged active-duty service personnel by thousands of dollars on their home mortgages. When families could not pay the excessive interest rates, the banks reportedly foreclosed on their homes – a violation of the Servicemembers Civil Relief Act.
In force for decades, the SCRA requires that banks reduce home mortgage interest rates to 6 percent when service members go on active duty, and it forbids foreclosing on service members’ homes without a hearing and court order.
A lawsuit filed by Marine Capt. Jonathan Rowles, a combat pilot, first disclosed the banks’ abuses. Rowles went on active duty in early 2006, but it wasn’t until late in the year that mortgage holder JP Morgan Chase reduced Rowles’ interest rate.
In 2009, Chase began calling Rowles’ wife, demanding they pay the bank $15,000 in back interest and penalties. Chase hounded the couple with multiple phone calls day and night, according to the suit. Jonathan Rowles received collection calls at 3 a.m. while on duty at Miramar, Fla.’s Air Force training site. Bank representatives threatened to throw the family out of their home, even though they never missed a monthly mortgage payment.
Pretrial discovery revealed Chase repeatedly charged Rowles interest rates above 9 percent.
It also revealed that Chase overcharged 4,000 active-service members and wrongfully foreclosed on at least 14 homes.
While Rowles fought against JP Morgan Chase, Sgt. James B. Hurley fought a similar battle against the abuses of Deutsche Bank and Morgan Stanley’s subsidiary Saxon Mortgage Services.
While Hurley served in Iraq, the banks failed to reduce the interest rate on his mortgage. Hurley and his wife could not make the monthly mortgage payments. The banks foreclosed and forced Hurley’s wife and two children out of their home.
Hurley returned from Iraq disabled and disheartened in December 2005 – less than two months after the banks sold his home for $76,000. Unable to find work, his marriage fell apart.
Hurley sued the banks for wrongful foreclosure and violation of SCRA. In 2009, a federal judge ruled in Hurley’s favor, but the banks continued to contest Hurley’s damages claim.
They claimed Hurley should receive only the home’s $76,000 foreclosure value. Hurley wanted punitive damages for the grief he and his family suffered because of the banks’ violation of SCRA and callous treatment of the Hurley family.
Recently, after five days of a trial on damages, the parties settled the case for an undisclosed sum.
The cases of the Rowles and Hurley families, with other examples, prompted an ongoing U.S. Department of Justice civil rights investigation.
The banks that violated SCRA claim ignorance, saying they never intended to break the law. But these powerful and sophisticated banks employ legions of high-priced attorneys. How could they not know their actions violated SCRA, especially after military families complained?
JP Morgan Chase is trying to make amends. By repaying all military personnel for past overcharges and capping future mortgage interest rates for active-duty personnel at 4 percent. Chase will no longer foreclose on the homes of military personnel on active duty. It is returning the homes previously foreclosed on to their rightful owners free of all remaining debt.
Chase is giving 1,000 homes to military veterans during the next five years and will hire 100,000 veterans within the next 10 years.
So far, other banks involved in the abusive practices remain unapologetic.
John D. Copeland, J.D., LL.M., Ed.D., is an executive in residence at The Soderquist Center for Leadership and Ethics and a retired professor of business at John Brown University in Arkansas. He’s also a Kallman executive fellow at the Center for Business Ethics at Bentley University in Waltham, Mass. He can be reached at jdcethics@gmail.com.[[In-content Ad]]
