Consumer Law

JP Morgan Chase Overcharges Thousands Of Military Families

By M. Stan Herring

Our friend Denise Richardson of givemebackmycredit.com has posted an article about a recent case where the "big bank" JP Morgan Chase's errors caused thousands of military families' mortgages to be overpriced. Paying too much for mortgages ruined the families' credit scores and was even the cause of as many as 14 wrongful foreclosures.

Chase would have been able to keep getting away with overcharging military families' mortgages if it hadn't been for Marine Captain Jonathan Rowles, who sued Chase for violating a law that protects active duty military from financial harm while they're deployed. The lawsuit took Chase by surprise and caused them to look at the way they handled military families. Chase found that 4,000 military families had been overcharged on their mortgages.

"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."

It's very difficult to believe that Chase didn't know about this law, but nonetheless, Chase says it's an "honest mistake" and is paying $2 million in refunds to the families. The bank also claims that the 14 homes that were wrongfully foreclosed on have been returned to the rightful owners.

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.

A lawsuit should be a last resort tactic to get a bank or company to follow the rules they should have been obeying to begin with. Lawsuits are expensive and time consuming, but a bank's reckless disregard for the law shouldn't be allowed to be excused as "honest mistakes."

Here's a short video about the case:

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If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

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Full post as published by Alabama Consumer Blog on February 08, 2011 (boomark / email).