Bankruptcy

Foreclosures in Violation of the Servicemembers' Civil Relief Act

By Adam Levitin

A few months ago, after the robosigning scandal broke, the banks assured us that they had done a thorough review of their foreclosure processes and everything was in order.  I seem to recall JPMorgan Chase's CEO Jaime Dimon stating in an Oct. 13, 2010 earnings call, "for the most part by the time you get to the end of the process we're not evicting people who deserve to stay in their house." Thus, by mid-fall, the banks had sounded the all clear sign, and said it was safe to go back in the waters. 

And yet now we learn that JPMorgan Chase has been engaged in wide-scale violations of the Servicemembers Civil Relief Act, including overcharging active duty military members on their mortgages and wrongfully foreclosing on their homes.  That's a lot of egg on JPM's face right now.  I guess, given the scope of JPMorgan's foreclosures, Dimon's "for the most part" statement is true, but it hardly instills confidence that our foreclosure process is working properly.

Banking is a business based on trust, and the farther we go down the foreclosuregate rabbit hole, the harder it becomes to believe the banks.  How many times are we going to keep believing the "there's nothing to see here folks" line?  Can we trust Jaime Dimon when he tells us that the situation is under control?  What happens to our financial institutions when they lose their credibility with the public?

Footnote:  anyone want to specultate on whether JPM as a servicer is liable for FDCPA violations? How about FCRA?

Full post as published by Credit Slips on January 17, 2011 (boomark / email).