We can hardly keep up with the daily reports about abusive or fraudulent mortgage servicing practices and loan modification runarounds. Homeowners continue to vent their frustrations and share stories of tremendous hardships created or compounded by, the actions -or in-actions -of their bank. Mortgage servicing companies have been allowed to continue to turn a deaf ear on the desperate pleas for help from once loyal customers -at least until the bank's hit with a lawsuit that then demands their attention (video below)
This week we've learned that thousands of military families have been overcharged for their mortgages by JP Morgan Chase bank. Not only were these families made to pay too much, the inflated bills have ruined their credit and contributed to as many as 14 wrongful foreclosures. At least fourteen families had their homes ripped out from under their feet without cause. I would bet those families did proverbial cartwheels trying to get the attention of someone at Chase -before being locked out of their homes.
Chase could have gotten away with their violations if not for one tenacious victim. Marine Captain Jonathan Rowles brought it to light when he hired an attorney to sue Chase Bank for violating a law designed to protect active duty military from financial harm when they themselves are in harm's way. This then got Chase's attention and caused the institution to look at the way it was handling its obligations, particularly to military families. It appears some 4000 military families have been overcharged on their loans. It's impossible to believe that Chase wasn't aware of this law;
"Under a law known as the Servicemembers Civil Relief Act (SCRA), active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure. Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they're in harm's way."
To remedy what the bank says are "honest mistakes", they are voluntarily paying out about $2 million in refunds. In addition, they claim that many of the wrongfully foreclosed homes have been restored to their owners. (Read: Chase's statement here)
The military families get some money back, homes are restored, and Chase gets off easily in the cash department (I know 2 million sounds like a lot but it's a very small drop in the bucket for Chase, and it averages out to about $500 per family). Everybody's happy, right? Wrong. Banks are STILL just as prone to error as they ever were, and it is STILL the customer's responsibility to check--and if need be, sue--to get a bank to behave by the rules. That's just not right.
The truth is, a lawsuit is costly and draining and, believe me, a last-resort tactic. The Rowels, like most of us, simply want our banks to fulfill their fiduciary duty to handle our mortgage properly. When a bank cannot or will not comply with that simple directive, that defiance should be perceived as acts of reckless and conscious disregard -NOT "honest mistakes".
Why does it take a lawsuit to get people to do the right thing? This story is yet another in a long line of examples that illustrate why we should all be grateful that we still have access to the courts. If the banking lobbyists had their way -we wouldn't be able to deter or correct financial wrongs and predatory practices a/k/a "honest mistakes". Right now, the Supreme Court is deciding on AT&T Mobility v Concepcion, a case that could limit the ways in which consumers can right the wrongs perpetrated on them by banks and other large corporations.
If AT&T wins this one, corporations will have the right to include in their contracts wording that prevents consumers from suing them in a class action lawsuit. We need to fight to maintain the ability to deter and correct corporate wrongs, or "mistakes" like those that cost these military families untold grief will never be found out. (READ: Update on Supreme Court Ruling here.)
See also: Torrey Shannon's article: JP Morgan-Chase "Accidentally" Foreclosed on Military Mortgages: Violated Decades of Existing Law