JP Morgan to Pay Military Personnel $56M for Bad Foreclosures
Some 6,000 active duty military personnel will take part in a settlement where JP Morgan will pay $27 million in cash to those who were overcharged on their mortgages, cut interest rates on soldiers’ home loans and return homes that were wrongfully foreclosed upon, as reported by Bloomberg. The terms of the total agreement for $56 million was filed in federal court in Beaufort, South Carolina.
Three months ago, JP Morgan admitted that one of the bank’s units had made errors in the handling mortgages of military personnel covered by the Service Members Civil Relief Act. As a result, 10 homes that were taken improperly in foreclosure actions were returned to military families. Under the Service Members Act, there must be enhanced reviews of the soldier’s mortgages and payment histories before any action can be taken. At the time JP Morgan did not provide the special review for the total of 18 homes that were foreclosed upon.
The errors surfaced after Marine Captain Jonathan Rowles, a fighter pilot, sued JPM over its handling of his loan. He claimed Chase Home Finance failed to grant his interest rate reduction request as provided by law and then threatened to report him to credit bureaus and start foreclosure proceedings on his home. Rowles and the estimated 6,000 other service personnel will share the $27 million in cash, resulting in an average payout of $4,500 per soldier. Additionally, JPM has agreed to return homes that were improperly foreclosed upon that had not yet been sold and to pay fair market value for those already auctioned off. The U.S. Justice Department has subsequently launched an investigation into the handling of service members’ mortgages by all lenders.