In response to embarrassing recent revelations that JPMorgan Chase & Co. failed to enforce a law protecting military members from foreclosure and high-cost credit, the nation's third largest mortgage banker announced several significant changes to its practices.
At issue is the Servicemembers Civil Relief Act, which bars lenders from foreclosing on active duty military members and caps their interest rate on all pre-existing consumer debt at 6%.
Among other changes, the bank said early Tuesday that it will lower the maximum interest rate it is charging active duty military members to 4% and roll out a special enhanced mortgage modification program for a wider class of military customers. (Currently, 30-year FRMs are being offered at 5% or higher.)
"The programs we are announcing today are a start, but in no way a finish," said Jamie Dimon, chairman and CEO of JPMorgan Chase. "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. 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. Today we want to begin a new way forward with the military and veteran community to make serving them a core part of how we operate our business every day. Our servicemen and servicewomen deserve nothing less."
Chase's widespread failure to enforce the law was the subject of a House Veterans Affairs Committee hearing last week where the bank discussed its efforts to make whole 4,500 military members it overcharged an average of $70 each and 18 that it improperly foreclosed on. The bank took a beating from lawmakers on both sides of the aisle and Chase hinted that the problems at its company are likely more widespread across the banking industry since it discovered the same compliance issues with accounts it inherited from its acquisitions of Washington Mutual and Bear Stearns.
At the hearing, Chase said it was refunding overcharged customers with interest and had been able to give the foreclosed home back to the homeowner in 12 instances. But lawmakers heavily criticized the bank for not doing enough to repair destroyed lives, particularly for servicemembers in harm's way in Iraq and Afghanistan.
Under the changes that Chase announced Tuesday, the bank appeared eager to address all the points of contention it came under attack for last week.
