Acknowledging that it "made mistakes" in servicing mortgages
taken out by military personnel, JP Morgan Chase & Co. has said
it refund approximately $2 million to service members who were
overcharged on their home loans.
In a statement issued today, the bank's chief communication
officer said the lender would begin mailing the refunds this week
to servicemembers who may have paid more than what was required on
their home loans.
NBC News, which has been covering the story, reported that a
Chase official had said that approximately 4,000 troops had been
overcharged, and that the bank had improperly foreclosed on 14
"We feel like we try to do a lot for military families and
veterans, so it's particularly painful to have made mistakes with
them in our core business," said Kristin Lemkau, JP Morgan Chase
chief communication officer, in the statement. She said the company
has been conducting a review of its home loans to servicemembers
for several months in an effort to identify problems and has put in
place a dedicated team of specialist for servicing military
The statement comes close on the heels of reports of
irregularities in the way major mortgage servicers handled
foreclosures, in particular that shortcuts were taken in processing
foreclosure claims that may had led to errors. Chase, Bank of
America and GMAC Mortgage temporarily suspended foreclosure
proceedings last fall to review foreclosure documentation practices
after the reports came out.
The situation that triggered NBC's investigation into Chase's
handling of military mortgages predates the so-called
"robo-signing" scandal and even the subprime mortgage collapse.
According to NBC, it began when a Marine aviator, Capt. Jonathan
Rowles, went on active duty and applied for a lower interest rate
his active status entitled him to under the Servicemembers Civil
Relief Act (SCRA).
Rowles and his wife reported that it took Chase several months
to lower his rate after he went on duty and later hit them with
collection calls trying to collect the overage. He later filed a
class-action suit on behalf of himself and other members of the
military who had been overcharged.
Under SCRA, on-duty members of the U.S. military are entitled to
have their mortgage rate capped at 6 percent and to be protected
from foreclosure as well. NBC reports that the case remains open
despite today's refund announcement by Chase. Lemkau said the bank
would "welcome the opportunity to talk to Captain Rowles and others
who would like to discuss their accounts."