Foreclosures: JPMorgan Chase's Abuse of U.S. Soldiers Shows System Has Collapsed

Last Updated Jan 25, 2011 6:47 PM EST

I'm way late to the party on this one, but it's outrageous enough to bear repeating. JPMorgan Chase (JPM) acknowledges that it broke federal law in wrongly foreclosing on more than a dozen families -- of U.S. military personnel:
[T]he bank admits mistakenly overcharging 4,000 military families for their mortgages and improperly foreclosing on 14 of them. The actions -- which the bank says it deeply regrets -- appear to violate the Servicemembers Civil Relief Act, a law designed to protect military families from added financial stress while troops are in harm's way.
When it comes to foreclosures, I can imagine few things worse than a hugely profitable bank seizing the homes -- legally or not -- of military personnel, especially active-duty troops. It's just wrong. The wife of a Marine fighter pilot whose house JPMorgan was improperly trying to seize -- the family had never missed a mortgage payment -- said the bank barraged them with collections calls, including on weekends and holidays. It took two years of legal wrangling to get the bank to admit its error.

Equally disturbing is what such reports suggest about the kind of treatment other homeowners facing foreclosure can expect at the hands of JPMorgan and other big banks. Certainly, it makes a mockery of JPMorgan CEO Jamie Dimon's recent claim that there was "almost no chance" the financial giant had wrongly foreclosed on anyone. Isn't this the kind lawyerly dissembling -- you could drive a Humvee through that carefully placed adverb -- that once got U.S. presidents impeached?

At least one state lawmaker is bothered enough to make a stink. Congresswoman Jackie Spier (D-San Francisco/San Mateo) today urged federal officials to hold JPMorgan responsible for its mistreatment of service people. She said in a letter to Federal Reserve chief Ben Bernanke and acting OCC head John Walsh:
JPMorgan Chase turned the lives of thousands of military families into nightmares. There is absolutely no excuse for this, even though the bank admitted its 'mistake'....

Further, I ask that all major financial institutions be audited to determine if this is a systemic problem and then take appropriate steps to assist affected military families and ensure that no more families are similarly victimized.
Of course, we already know there's a systemic problem with foreclosures. It's glaringly apparent at every stage of the process, from faulty documentation of property ownership, to fee-gouging by loan servicers, to foreclosing on homeowners who weren't behind on their mortgages. No one is immune to being screwed by that system -- not even troops laying their lives on the line for our country.

Discouragingly for homeowners -- and soldiers who may have been victimized by other banks -- the feds appear to have moved on to larger concerns, like boosting trade with China. Oo-rah.

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  • Alain Sherter On Twitter»

    Alain Sherter is an award-winning business journalist who has written for The Deal, MarketWatch and Thomson Financial Media.

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