JP Morgan & Chase has recently agreed to settle allegations brought by military servicemembers over improper mortgage and foreclosure practices for tens of millions of dollars.
According to Bloomberg, approximately 6,000 active duty military members brought the case against the lender, claiming it violated the Servicemembers Civil Relief Act in the way it handled their mortgages. The act was reportedly passed in 1942 to shield deployed servicemen and women from financial problems, and allows them to demand to be charged an interest rate on their mortgage of 6 percent or less while they are on active-duty status. It also requires that an enhanced review of soldiers' mortgages is conducted before they can be subject to foreclosure.
U.S. Marine Corps Capt. Jonathon Rowles, a plaintiff in the case brought by military members against JP Morgan & Chase, claimed that thousands of military members were overcharged on their mortgages, and many others were wrongfully foreclosed upon in violation of the servicemembers' act.
Now, Rowles and the lender have agreed to settle the suit. As part of the terms of the settlement, $27 million will be made available by the bank's military customers. Additionally, $12 million will be paid out to the members of the class and another $15 million will be set aside for allocating damages on a case-by-case basis, the bank said in a release.
In February, JP Morgan said that its mortgage unit failed to provide the paperwork mandated by the 1942 law in the case of 18 foreclosures, and said that it has returned 10 homes to soldiers who were wrongfully foreclosed on. Now, another $6.4 million in extra damages will be allocated to servicemen and women who had been subject to wrongful foreclosure.
"We are sorry and regret the mistakes our firm made on mortgages for members of the military, and we'd like to thank Captain and Mrs. Rowles for helping us address them," said Frank Bisignano, Chief Administrative Officer of JPMorgan Chase.
Rowles voiced satisfaction with the terms of the settlement, which also reportedly include temporary interest rate reductions for military borrowers and an enhanced loan modification program.
"My family and I thank Chase for resolving this matter," said Captain Rowles. "It is our hope that this settlement will result in greater attention by the entire financial services industry to the nation's laws that protect our military families."