The military foreclosure mess that resulted from inappropriate practices by JPMorgan Chase has reached settlement for $27 million.
JPMorgan Chase & Co. (NYSE: JPM) has agreed to settle claims of overcharging active military personnel on their mortgage payments after the lender was accused of violating the Servicemembers Civil Relief Act (SCRA).
The federal law caps interest rates on mortgages at 6% while military members are activated for duty, and it also forbids foreclosure proceedings until nine months after the service member returns from active duty. The class action lawsuit filed by Marine Corps Capt. Jonathan Rowles, who charged that the bank failed to reduce the interest rate on his mortgage.
A federal investigation revealed that JPMorgan had overcharged nearly 6,000 active military personnel while 18 military homes were foreclosed upon.
Under the settlement agreement filed April 21 in U.S. District Court in Beaufort, S.C., and awaiting court approval, JPMorgan will pay $12 million to approximately 6,000 service members while another $15 million will be allocated for individual damages.
JPMorgan has already made $6 million in payments to affected military service members and the bank will set aside another estimated $6.4 million for additional payments to borrowers who may have been subjected to wrongful foreclosures.
Additionally, JPMorgan will pay $8 million for legal fees and costs incurred by affected military personnel involved in the class action lawsuit.
“We are sorry and regret the mistakes our firm made on mortgages for members of the military, and we’d like to thank Capt. and Mrs. Rowles for helping us address them,” said Frank Bisignano, head of Chase Home Lending. “We hold ourselves accountable and responsible for these mistakes, and fixing them is just the beginning of a new way forward.”
After the JPMorgan’s military mortgage blunder in the February, the bank changed SCRA pricing that reduced the effective mortgage interest rate, unveiled an enhanced modification program, offered home ownership assistance, and form an alliance with corporate employers to create jobs and offer education and training to transitioning military personnel and veterans.