Agency warns banks of foreclosure protection for military personnel
The new Consumer Financial Protection Bureau warned banks not to violate laws that protect active-duty military personnel from home foreclosures and high interest rates.
The move comes after news reports of alleged violations by JPMorgan Chase & Co. and Germany’s Deutsche Bank of the Servicemembers Civil Relief Act, a 2003 law that protects military families.
In letters Tuesday to the chief executives of the 25 largest banks that provide mortgage servicing, Holly Petraeus, the head of the still-forming bureau’s Office of Servicemember Affairs, urged them to educate their employees about the law and take other “proactive steps.”
The 8-year-old law “provides important protections for our military families who do so much for our country,” Petraeus wrote.
“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,” she wrote.
Chase said last month, following an NBC News report, that it had “made mistakes” and was refunding a total of about $2 million in overcharges to more than 4,000 military families. The bank said it had foreclosed on 14 service members “in error,” had resolved 13 of those cases and was working to resolve the last one.
Deutsche Bank also may have violated the law, according to a New York Times report last week.
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.
Petraeus, the wife of Army Gen. David H. Petraeus, the top U.S. commander in Afghanistan, was appointed last month to the implementation team setting up the consumer bureau. The longtime advocate for military families was tapped by Elizabeth Warren, an advisor to President Obama and Treasury Secretary Timothy F. Geithner, who is setting up the bureau.
The bureau, created by the financial overhaul law, was designed to protect consumers in the financial marketplace and will begin full operations in July.