Congressional hearings

The alleged problems regarding foreclosure fraud were so widespread and popularized by the media that U.S. Congresswoman Maxine Waters announced that theUnited States House of Representatives subcommittee on housing issues will hold a hearing on November 18, 2010 to examine problems emerging in the mortgage servicing industry.

Illegal foreclosures and mortgage overcharges on active-duty military members

The Servicemembers Civil Relief Act (SCRA) of 2003 protects United States active-duty military members from civil court proceedings (such as foreclosure) while serving their country. The SCRA also limits the interest rate which an active-duty military member can be charged on any outstanding debt (secured before their deployment) to 6% (six percentage points). In spite of these special protections granted to active-duty military members, news reports surfaced in which large mortgage servicers and investment banks illegally overcharged military families with members on active duty on their mortgages.

In January 2011, JP Morgan Chase, the United States’ second-largest bank based on market share, admitted that it had illegally overcharged some 4,000 active-duty military members on their home mortgage and accidentally foreclosed on as many as 14 families. Facing pressure from a United States Marine’s lawsuit over the violations, Chase announced that it would work to reverse the illegal foreclosures and was mailing $2 million to the 4,000 military families as compensation, implying the mortgage bank overcharged each family an average of $500 on their mortgage. Lawsuits regarding the overcharges are still pending as of January 2011.

Delaware Attorney General Beau Biden sent a letter to several large lending institutions demanding they review their operations in order to safeguard active-duty military members from illegal mortgage overcharges and fraudulent foreclosures. Those institutions included Citigroup, Inc., Bank of America Corp., Wells Fargo & Co.,PNC Financial Services Group Inc., Ally Financial Inc. and Goldman Sachs Group Inc.‘s Litton Loans.

Mortgage Servicing Overview 4

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