In 2010, in the throes of the largest real estate meltdown and mortgage crisis in America, the nation's second largest bank, JP Morgan Chase, admitted to overcharging interest rates on military mortgages, a move which may have exacerbated the housing crisis for thousands of servicemembers.
Despite the Servicemembers Civil Relief Act, which protects the finances and families of soldiers on active duty by capping interest rates to active duty military at 6%, JP Morgan Chase admitted to overcharging interest on several thousand military mortgages, including the homes of troops fighting in Afghanistan.
JP Morgan Chase also admitted to improperly foreclosing on more than a dozen military family homes. This may prove to be a breach of the Heroes Keep Their Homes Act of 2010 which allows, upon servicemember application, a stay of court proceedings to enforce and adjust a mortgage obligation when the servicemember's ability to pay his mortgage is affected by military service. Under the Heroes Keep Their Homes Act of 2010, the sale, foreclosure, or seizure of property due to a servicemember's breach of a mortgage obligation is invalidated, except in certain circumstances.
JP Morgan Chase had over $2.14 trillion in total assets as of September 2010, second only to Bank of America Corp. at $2.34 trillion.
MARINE CAPT ROWLES' MORTGAGE NIGHTMARE
The overcharged mortgages provided by JP Morgan Chase Bank came to light in a lawsuit filed by a single servicemember, Marine Capt. Jonathan Rowles, a backseat pilot of an F/A 18 Delta fighter jet who served as a Marine for five years, and his wife, Julia Rowles. In addition to serving his country on active duty, Marine Capt Rowles and his wife had also actively been battling Chase Bank for a length of time equal to Rowles' military service.
In fact, Chase Bank mortgage overcharges may never have come to light but for Rowles, 31, and his wife, Julia, who described their experience with JP Morgan Chase Bank as a nightmare which began in 2006 when Marine Capt. Rowles went on active duty. Under the Servicemembers Civil Relief Act (SCRA), Marine Capt Rowles was eligible to have his mortgage interest rate, which was adjustable and rising, lowered to 6 percent.
While Chase Bank took a few months to lower Rowles' mortgage interest rate, the bank continued overcharging the Rowles by as much as $900 a month. By Fall 2006, Chase finally began charging Rowles the correct 6 percent interest rate on their mortgage loan.
MORTGAGE PROBLEMS AND COLLECTIONS CALLS
Then in 2008, Chase began a series of incessant collections calls - days, nights and weekends, sometimes three calls per day at all hours, claiming the Rowles owed as much as $15,000. The collections calls from Chase Bank continued relentlessly even while Marine Captain Rowles was stationed in Miramar, including verbal threats to take their house and report the Rowles to a credit bureau for credit delinquency.
Throughout the ordeal, the Rowles insisted that they didn't owe this money to Chase Bank, and that they had in fact never missed a mortgage payment. But while the Rowles' kept making payments on their mortgage at 6 percent, Chase bank wrongly charged interest at 9 or 10 percent. Despite the Rowles repeated explaination of the bank error to Chase, they continued being harassed, and for money they did not owe.
Finally, Capt. Rowles secured legal help to sue Chase bank, for himself and other members of the military.
PROTECTING YOUR ASSETS UNDER SCRA
The Servicemembers Civil Relief Act is a set of protections revamped and expanded in 2003 specifically to shield troops and their families from financial stresses such as eviction, foreclosure and bankruptcy at home, while soldiers are actively serving our country overseas. Under SCRA, active-duty troops generally have their mortgage rates lowered to 6 percent.
While in a statement to the press Chase officials noted their deep appreciation for servicemembers who fight to protect our country, their actions may not be in sync with their sentiments. Marine Captain Rowles was found to not be an isolated case of overcharged mortgage interest; what came to light was that some 4,000 troops may have been overcharged for mortgages by JP Morgan Chase Bank, in violation of their SCRA protections. In addition, 14 military family homes were foreclosed by Chase Bank, possibly in violation of not only SCRA but also of the Heroes Keep Their Homes Act of 2010.
JP Morgan Chase bank agreed to a total estimated $2 million in refunds to military families who may have been overcharged, and stated that most of the families improperly foreclosed upon have gotten or will get their homes back. However, the emotional strain on soldiers like Marine Captain Rowles and Julia Rowles, who lived with the additional stress of their mortgage battle with Chase Bank, added to the challenges of military active duty, cannot be reversed.
VA MORTGAGES SERVE VETERANS NEEDS
Thanks to the Veterans Administration's GI Bill, veterans and active duty military have a better route to military homeownership: today's VA Home Loan program. VA understands that troops need to focus on their mission, not on managing the financial aspects of military home life or the threat of foreclosure.
In 2010, despite a sharp downturn in the housing market, veterans continued to use their VA Home Loan benefit, thanks to favorable terms, lower interest rates on VA mortgages, no downpayment requirements, and a variety of support services for VA home loan borrowers including VA support for military homeowners facing financial difficulty. VA is committed to helping military homeowners avoid foreclosure, making it less likely that military families will suffer this consequence of mortgage delinquency.
If you've served on active military duty with an honorable discharge for a minimum of 90 days during wartime, or a minimum of 181 continuous days of military service during peacetime, or you have served in the National Guard or Reserves for a minimum of six years, you may be eligible for all the many benefits of a VA Home Loan.
MILITARY MORTGAGES PENDING
In February 2010, the Rowles lawsuit against JP Morgan Chase Bank was still pending, while millions of Americans, military and civilian, struggled to maintain conventional mortgage payments and fight foreclosure. Across America, large banks remain under scrutiny for allegedly improperly foreclosing on homes across the country, or for knowingly issuing mortgages to those not qualified.
In 2010, the mortgage crisis was far from over. If you are a military homeowner, you may have the opportunity to switch your conventional mortgage to a VA home loan and gain the benefits and support of VA home loan programs. Here are just some of the highlights of VA home loans: