Posted on Thursday, March 17, 2011
Senators and banks across the country are joining forces in order to provide mortgage protection for members of the military.
After reports that some members of the military and their families are struggling to remain in their homes, Sen. Sheldon Whitehouse (D-Rhode Island) and others including Sen. Jeff Merkley (D-Oregon) announced an act to protect servicemembers from abuses.
“We can’t stand idly by while our servicemembers and their families fall victim to mortgage abuse,” said Merkley. “After sacrificing so much to keep our nation safe, the least we can do is ensure that they’ll have a stable home to return to. We need to strengthen mortgage protections for our military families, and help make the transition to civilian life as seamless as possible.”
In a similar effort, two of the top servicers have announced plans to help protect members of the military from foreclosure and high credit costs.
Bank of America and JP Mortgage Chase announced separate programs that will extend mortgage protection and specialized modifications to service members.
JP Morgan’s announcement came after it was revealed that the company wrongfully foreclosed on 18 military families and overcharged thousands of borrowers. The company admitted to violating the Servicemembers Civil Relief Act (SCRA) in its actions.
Now the company says it will begin on April 1 an enhanced modification program for all members of the military who have served on active duty as far back as September 11, 2001. The servicer will offer the program to those who are delinquent or having trouble making their mortgage payments, and the program will go beyond the government’s Home Affordable Modification Program (HAMP) requirements.
The company announced that it will not foreclose on any currently deployed active military personnel and will also lower eligible borrowers’ mortgage interest rate to 4 percent while on active duty and for a year after.
“Chase believes we now have the systems and controls in place to avoid wrongful foreclosure proceedings on any military covered by SCRA,” the company said in a statement.
The statement continued, “In cases where we have mistakenly foreclosed on military borrowers who should have been covered by SCRA, in addition to rescinding the sale, we will forgive all their remaining mortgage debt. Going forward, if we ever have a wrongful foreclosure sale on an SCRA covered customer, we will forgive all of their remaining mortgage debt, as well.”
Bank of America announced on Thursday that it too had developed programs to help protect and benefit military members.
“Our new Military Loan Modification Program builds on our long-standing commitment to the United States military forces and will help address the heavy burden of financial matters at home that can weigh on those who are protecting our freedoms,” said Terry Laughlin, EVP for Bank of America.
He continued, “Military men and women face extraordinary circumstances, and they make unique sacrifices for all of us. For these reasons, we want this combination of tools to address their needs and help them when they need it most.”
Bank of America’s Military Loan Modification Program will provide principal forgiveness on underwater mortgages. The bank will reduce the amount owed to as low as 100 percent of the current market value.
The company will also offer a 4 percent interest rate on mortgages of active duty service members.
The lender said it will initially offer the loan modification program and reduced interest rate to distressed military customers with loans owned and serviced by the bank. The bank hopes to expand the benefits to loans not owned by the bank but points out the decision is subject to investor approval.
Both banks also announced they are implementing efforts to help service members once they return from duty.
JP Morgan announced it would form an alliance with other major corporate employers to hire 100,000 military and veterans over the next ten years and plans to partner with Syracuse University to offer a Technology Education certificate exclusively for veterans to prepare them for technology careers.
Bank of America announced it is also planning on employing more than 5,000 active and veteran military members and partnering with the Department of Defense to provide full-service banking to troops and contractors both domestically and overseas.
By: Joy Leopold, DS NEWS