LPS to Track Servicemember Loans
When the Servicemembers Civil Relief Act was enacted into law in 2003, it was supposed to prevent military personnel from losing their homes while they were protecting our country. But years later there continues to be evidence companies need to better track their compliance with it.
The law prohibits servicers from foreclosing or seizing property from active-duty military personnel unable to meet their obligations.
The protection from foreclosure lasts up to nine months after active duty has ended, and service members also qualify for interest rate limits and other shields.
Despite this, mortgage servicers have in some cases illegally foreclosed the home of military service members.
To help servicers address these violations and comply with industry regulations, Lender Processing Services has added new functions to its loan servicing platform, MSP, to further protect soldiers from foreclosure.
There are now an additional 30 fields installed in MSP that helps servicers track and manage loans belonging to military service personnel. The Jacksonville, Fla.-based technology and analytic provider said the new features provide stopgap measures to help servicers improve the identification and processing of protected loans.
MSP technology currently services approximately half of the nation's mortgage loans by dollar volume, LPS said.
“The expanded functionality can capture and store information about a borrower's active duty status, while other unique identifiers detect SCRA-eligibility to ensure fees are not assessed or collected in error and that payoff interest is calculated using the correct SCRA rate limits,” said Joseph Nackashi, chief information officer at Lender Processing Services.
Recent examples of servicers that violated the SCRA include BAC Home Loans Servicing, formerly known as Countrywide Home Loans Servicing, who illegally foreclosed the homes of approximately 160 service members between January 2006 and May 2009. B of A reached an agreement with the Department of Justice in November to pay a minimum of $116,785 plus compensation for any equity lost to each service member whose home was unlawfully foreclosed on by its subsidiary.
JPMorgan Chase also admitted earlier this year that it was overcharging 4,000 military members on their home loans and improperly foreclosed the properties of 14 military families.
To correct its mistake, the New York-based bank lowered the maximum interest rate it was charging active duty military members to 4% and rolled out a special enhanced mortgage modification program for a wider class of military customers.
“This company has a great history of honoring military and veterans, and the mistakes we made on military foreclosures are a painful aberration on that track record,” said Jamie Dimon, chairman and chief executive officer of JPMorgan Chase, in a press release. “We deeply apologize to our military customers and their families for these mistakes. We cannot undo them, but we can take accountability for them, fix them and learn from them.”