Acknowledging that it "made mistakes" in servicing mortgages taken out by military personnel, JP Morgan Chase & Co. has said it refund approximately $2 million to service members who were overcharged on their home loans.
In a statement issued today, the bank's chief communication officer said the lender would begin mailing the refunds this week to servicemembers who may have paid more than what was required on their home loans.
NBC News, which has been covering the story, reported that a Chase official had said that approximately 4,000 troops had been overcharged, and that the bank had improperly foreclosed on 14 military homeowners.
"We feel like we try to do a lot for military families and veterans, so it's particularly painful to have made mistakes with them in our core business," said Kristin Lemkau, JP Morgan Chase chief communication officer, in the statement. She said the company has been conducting a review of its home loans to servicemembers for several months in an effort to identify problems and has put in place a dedicated team of specialist for servicing military mortgages.
The statement comes close on the heels of reports of irregularities in the way major mortgage servicers handled foreclosures, in particular that shortcuts were taken in processing foreclosure claims that may had led to errors. Chase, Bank of America and GMAC Mortgage temporarily suspended foreclosure proceedings last fall to review foreclosure documentation practices after the reports came out.
The situation that triggered NBC's investigation into Chase's handling of military mortgages predates the so-called "robo-signing" scandal and even the subprime mortgage collapse. According to NBC, it began when a Marine aviator, Capt. Jonathan Rowles, went on active duty and applied for a lower interest rate his active status entitled him to under the Servicemembers Civil Relief Act (SCRA).
Rowles and his wife reported that it took Chase several months to lower his rate after he went on duty and later hit them with collection calls trying to collect the overage. He later filed a class-action suit on behalf of himself and other members of the military who had been overcharged.
Under SCRA, on-duty members of the U.S. military are entitled to have their mortgage rate capped at 6 percent and to be protected from foreclosure as well. NBC reports that the case remains open despite today's refund announcement by Chase. Lemkau said the bank would "welcome the opportunity to talk to Captain Rowles and others who would like to discuss their accounts."