CoreLogic released a tool Monday to let servicers run automated checks on pools of loans to determine if borrowers are protected from foreclosure by the Servicemembers Civil Relief Act.
The Verification of Military Status service aims to help servicers avoid violating the SCRA, which offers a number of protections to active duty members of the military, including lower interest rates during their time serving, a ban on foreclosures while the borrower is serving and up to nine months after returning from duty.
Servicers can use a Defense Department website to do an active duty search of their borrowers, but it is a manual process that requires an individual check for each file. CoreLogic’s service automates that process and creates a report detailing any SCRA-protected borrowers in a pool of loans, with active duty status, military branch, active duty start date, and date of discharge, if applicable.
A number of major servicers have run afoul of the SCRA. For example, on April 21, JPMorgan Chase agreed to a $27 million out-of-court settlement for a class-action lawsuit filed by a group of servicemember mortgage borrowers who claimed the bank’s mortgage unit violated provisions of the law.
In addition, Chase implemented new policies to prevent foreclosures prohibited by the SCRA, including rescinding the foreclosure sale and forgiving the mortgage debt of SCRA-protected borrowers who were previously foreclosed on. In future cases of improper foreclosures that should have been prohibited by the law, Chase will forgive the remaining mortgage debt for those borrowers as well.
Other banks have settled similar claims, including Wells Fargo, which in March agreed to pay $10 million to settle SCRA-related claims.
Servicers have typically used automated technology to run checks on the DOD website. But the huge demand for the site was causing it to crash. The department implemented a number of new policies for the site, including the addition of a CAPTCHA phrase to the online duty check tool, requiring a human to type the distorted words appearing in a box on each check. Another rule limits the number of checks that an entity can do on the site to 1,000 per hour.
Santa Ana, Calif.-based CoreLogic’s offering is similar to a
