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CFPB to banks: Foreclosures on active-duty military off limits

On Behalf of | Feb 4, 2011 | Firm News, Home Foreclosure

Last month, NBC News reported that JPMorgan Chase had allegedly violated the Servicemembers Civil Relief Act, a 2003 law that protects active-duty military personnel from civil lawsuits, including home foreclosure, and from high mortgage interest rates. Chase has now admitted the wrongful foreclosure of at least 14 service members’ homes, most of which are already resolved. It also said it would refund $2 million in interest overcharges to military personnel. Last week, the New York Times reported that the German bank Deutsche Bank may also have violated the law.

This week, a representative of the newly created Consumer Financial Protection Bureau (CFPB) has taken an active step to prevent more foreclosures on active-duty military personnel. Holly Petraeus, head of the Office of Servicemember Affairs for the new bureau, wrote a letter to the CEOs of the nation’s 25 largest mortgage servicers.

The CFPB was created last July with the passage of the Dodd-Frank Act and is still being set up. It won’t officially begin to operate until July 2011. Petraeus, the wife of Army General David Petraeus, the top military commander in Afghanistan, was appointed last month to help set up the new consumer bureau. She is a longtime advocate for military families.

CFPB: Banks should take proactive steps to protect military families from wrongful foreclosure

Hoping to prevent a new chapter in the legal morass now known as “foreclosure-gate,” Petraeus urged the CEOs to educate their employees about the Servicemembers Civil Relief Act and take other proactive steps to comply with the law.

The Servicemembers Civil Relief Act “provides important protections for our military families who do so much for our country,” Petraeus wrote in the letters on Tuesday.

“I know that you appreciate the importance of these … protections, and I appreciate your assistance in ensuring that your bank does not overlook its obligations – legal and otherwise – to your military customers.”

Members of Congress have called for investigations into violations of the Servicemembers Civil Relief Act, which should protect active-duty military personnel from foreclosure. The law also prohibits any mortgage lender from charging more than 6 percent interest on debts owed by active-duty service members.

Some members of Congress have called for investigations into violations of the law, which prohibits banks from charging more than 6% interest on the debts of active-duty service members and from foreclosing on their homes.

Source: Los Angeles Times, “Agency warns banks of foreclosure protection for military personnel,” Jim Puzzanghera, February 2, 2011

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