COMMENTARY: by JONATHAN FOXX

 

Jonathan Foxx, former Chief Compliance Officer of two publicly traded financial institutions, and the President & Managing Director of Lenders Compliance Group, the nation’s first full-service, mortgage risk management firm in the country.

It seems the mantra of our times is "mistakes were made." In an era when lack of accountability in politics and finance has become all but forlornly accepted by many voters, and the word "blame" is banned from public discourse as being unproductive rhetoric, we find out within the last few days that J.P. Morgan Chase (JPM) "wrongly foreclosed on 14 active-service military families and overcharged thousands more on their mortgages."

Is this a symptom or an isolated incident?

Accidentally Foreclosing on Veterans

The findings come from a year long internal audit conducted by JPM of its accounting requirements involving active military service under the Service Members Civil Relief Act (SCRA).

Indeed, back in April 2008, Congress passed the Foreclosure Prevention Act, which aimed at protecting active duty service members and their families from foreclosure. In this legislation, John Kerry introduced the Military Family Homes Protection Act (MFHPA), thereby expanding the scope of the SCRA.

Salient provisions included the specific relief to active duty soldiers with, among other things, one year relief from increases in mortgage interest rates. Soldiers returning from war could expect that, under current law, those interest rates would be no more than 6%, and their mortgages are not subject to the delinquency process, let alone having their properties subject to foreclosure. In fact, another feature of the MFHPA was its extension of certain SCRA protections from 3 to 9 months, allowing a returning service member time to meet with the lender and take corrective action.

Mistakes Were Made

Still, mistakes were made. Foreclosures happened. 

Veterans lost their homes and many were overcharged.

How many military families were overcharged in interest? 4,000.

Thus speaks JPM’s Kristin Lamkau, Chief Communication Officer: 

• We made mistakes here and we are fixing them. Any customer mistake is regrettable.
• We feel particularly badly about the mistakes we made here.