JP Morgan Settles Suits for Improper Military Foreclosures
JP Morgan, one of the national powerhouse banks accused of improperly filing foreclosure paperwork back in October 2010, has agreed to fork over $27 million to over 6,000 active military personnel who were being overcharged on their home loan mortgages.
JP Morgan will also be reducing the interest rates on soldiers’ homes and returning homes that were erroneously foreclosed. The firm admits to having made critical errors in managing the mortgages of military families.
All in all JP Morgan will pay out $56 million to military personnel.
Under the Servicemenbers Relief Act, especially thorough reviews of paperwork and payment history are required before foreclosing on the homes of military personnel. In February JP Morgan said that they had failed to conduct the extensive review in 18 cases where the homes of military families were foreclosed.
Service members can request to have their loan interest rate reduced to 6% while deployed. Bank executives discovered that they were neglecting to comply with this statue of the Servicemembers Relief Act when a fighter pilot sued them for mismanaging his
mortgage loan.
The pilot, John Rowles, was initially ignored when he requested to have his interest rate reduced. When they finally agreed to comply, the bank forced him to reapply four times within the year to keep the 6% interest rate. Throughout the ordeal, bank officials threatened to report Rowles to credit bureaus.
As part of the agreement JP Morgan will cut the interest rate on all Military mortgages to 4% for one year.
JP Morgan will return foreclosed homes that have not been sold, and will buy back and then return those that have been sold off. Inclusive in the $56 mil is $8 million that will go to paying off the legal fees of service members, like Rowles, who took legal action against the bank.
The agreement still has to be approved by the U.S. district court. In response to the admitted errors the
U.S. Justice Department has launched an investigation to be certain that all errors have been accounted for and corrected.