A new tool checks Department of Defense records to verify whether defaulted mortgage borrowers are actively serving in the military, providing a regulatory compliance check for servicers while staying within the confines of department policies.
Mortgage default management software developer Quandis said its Military Status Service Search came out of a need for servicers to maintain compliance with the Servicemembers Civil Relief Act, which offers a number of housing-related protections to active duty members of the military.
Servicers can use a Defense Department website to do an active duty search of delinquent borrowers prior to foreclosure review meetings. In addition, servicers and their foreclosure attorneys do another check immediately prior to a foreclosure sale, explained Scott Stoddard, the CEO of Foothill Ranch, Calif.-based Quandis.
But servicers still run afoul of the legislation. 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. Other banks have settled similar claims, including Wells Fargo, which in March agreed to pay $10 million to settle SCRA-related claims.
The Quandis tool is an automated search that complies with the DOD regulations, Stoddard said. Servicers upload a batch of borrower information to a secure server and the technology runs the checks.
“The Department of Defense is very protective of their information. They’re making it available, but they’re putting some rules around it and we’re just making sure that we’re following the rules,” Stoddard said in an exclusive interview with Mortgage Technology.
