WASHINGTON, DC – March 7, 2012 – (RealEstateRama) — Congressman Mike Michaud, Ranking Member of the Veterans’ Affairs Health Subcommittee, praised the announcement that servicemembers and veterans hurt by mortgage abuses will be provided relief. According to the White House, this relief coming from mortgage servicers is in addition to the over $25 billion committed through the previously announced settlement completed by the federal government and 49 state Attorneys General last month.
“This is the least that should be done for our active duty military and veterans,” said Michaud. “They’ve given up so much for our country, and they shouldn’t ever have to worry about being foreclosed on or overcharged as a result of their service. It’s not only unconscionable; it’s against the law. I encourage any Mainer who thinks they may qualify for this assistance to call the Department of Justice for more information.”
Michaud has been active in pushing to hold banks accountable for the abuses suffered by servicemembers and veterans. Last February, JP Morgan Chase took action in response to a House Veterans Affairs’ Committee hearing where Michaud and his colleagues took the bank to task for improperly increasing interest rates for thousands of military families above the six percent protection cap and erroneously foreclosing on others. As a result of that hearing, JP Morgan Chase announced it will significantly enhance its programs to help military and veteran customers, including lowering interest rates for eligible borrowers.
More information from the White House on the announcement to help servicemembers and veterans can be found below.
Compensating Servicemembers Wrongfully Foreclosed Upon. Servicers will conduct a review – overseen by the Department of Justice’s Civil Rights Division – of the files of every servicemember foreclosed upon since 2006 to determine whether any were foreclosed on in violation of the Servicemembers Civil Relief Act (SCRA). Servicers will compensate those who were with a payment equal to whichever of the following sums is higher:
o the servicemember’s lost equity, plus interest, and an additional $116,785; or
o an amount provided for the same violation as a result of a review conducted by the banking regulators.
Compensating Servicemembers Wrongfully Charged Higher Interest Rates: Servicers will conduct a review – also overseen by DOJ’s Civil Rights Division – of the files of their servicemember clients dating back to 2008 to determine whether they charged any an interest rate in excess of 6% on their mortgage after a valid request to lower the rate, in violation of the SCRA. Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to at least four times the amount wrongfully charged.
o For example, if a servicemember who took out a $200,000 mortgage with a 7% interest rate was wrongfully denied a request to lower their interest rate to 6% over a course of 18 months, they would receive a payment of over $9,000, plus interest.
Providing Relief for Servicemembers Forced to Sell Their Home at a Loss Due to a Permanent Change in Station: Under the Department of Defense’s Homeowners’ Assistance Program (HAP), some servicemembers who are forced to sell their home at a loss due to a Permanent Change in Station (PCS) may be compensated for the loss in their home’s value. Under this settlement, servicers will provide short sale agreements and deficiency waivers to those servicemembers who were forced to sell their home for less than they owe on their mortgage due to a PCS, but who are not eligible for HAP. This means that the benefits of that program will finally be extended to servicemembers who bought their homes between July 1, 2006 and December 31, 2008, or who received a PCS after October 1, 2010.
$10 Million for the Veterans Housing Benefit Program. Under the settlement, servicers will pay $10 million into the Veterans Housing Benefit Program Fund, through which the Department of Veterans Affairs guarantees loans provided on favorable terms to eligible veterans.
Foreclosure Protections for Servicemembers Receiving Hostile Fire/Imminent Danger Pay. The SCRA prohibits servicers from foreclosing on active duty servicemembers without first securing a court order, but only if their loan was secured when they were not on active duty. The settlement extends this protection to all servicemembers, regardless of when their mortgage was secured, who within nine months of the foreclosure received Hostile Fire/Imminent Danger Pay and were stationed away from their home.
For further questions:
- Any Servicemember who believes his or her rights were violated by Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo can contact the Justice Department directly at 1-800-896-7743. The Department will have access to information to determine whether or not servicemembers are victims and the settlement requires those individuals to be contacted.
- Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance office. For the relevant contact information, please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator.
- Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov.