Chase to return troops' mortgage overcharges

JPMorgan Chase bank will return $2 million in mortgage overcharges to thousands of military families and has resolved problems with all but one of the 14 active-duty members foreclosed on by mistake, a bank spokeswoman said Monday.

About 4,000 families will get refunds starting this week, said Chase spokeswoman Kristin Lemkau. In most of the 14 improper foreclosures, the home has been returned, she added.

"We made mistakes," Lemkau said, "and we are fixing them."

No information was available Monday on whether any affected families and properties were on Long Island.

Chase's admissions are an outgrowth of a lawsuit filed by Marine Capt. Jonathan Rowles, NBC News reported Monday. Rowles, of South Carolina, has been a Marine jet pilot for five years. He and his wife, Julia, say they've been battling Chase almost that long. The suit is still pending.

According to NBC News, the dispute apparently caused the bank to review its handling of all mortgages involving active-duty military personnel.

Under a law known as the Servicemembers Civil Relief Act, active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure.

Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they're in harm's way.

The saga began in 2006 when Rowles went on active duty. Under the relief act, he could get his mortgage interest rate, which was adjustable and rising, lowered to 6 percent, according to the NBC report.

But Chase took a few months to lower Rowles' rate, overcharging the family, according to Rowles, by as much as $900 a month, the report said. In fall 2006, Chase finally began charging Rowles the correct 6 percent rate.

Everything went smoothly until two years ago, when, the Rowleses told NBC, Chase began hitting them with collection calls that escalated to sometimes three a day, claiming they owed as much as $15,000.

"Saturday, Sundays, middle of the night. It did not matter if it was a holiday," Julia told NBC.

In admitting mistakes, Chase, the nation's second-largest bank by assets, said it now has a team dedicated to servicing home loans of active-duty personnel, Lemkau told NBC.

"There is no finer group of people than the men and women in the armed services who fight to protect our country every day," she said. "While any customer mistake is regrettable, we feel particularly badly about the mistakes we made here."

The mistakes are the latest controversy in questionable foreclosures. Chase was one of three major lenders that temporarily halted foreclosure auctions last fall when employees admitted to signing thousands of foreclosure-related documents per month without confirming their accuracy. That prompted other lenders, including Wells Fargo, to examine files and resubmit papers on thousands of foreclosure cases.

The federal government and the attorneys general of all 50 states are investigating the industry's foreclosure practices.