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The Service Members Civil Relief Act Revisited

The Service Members Civil Relief Act (SCRA) was designed to protect military families from added financial stress while a military member is deployed in harm’s way. The Act caps interest rates for loans for active duty military members at a 6% annual rate and shields the member from foreclosure. The law applies to any debt incurred by a service member, including credit cards, car loans and other consumer credit.


In the last few weeks, a great deal of attention has been generated, shedding light on a variety of lenders who overcharged and foreclosed against homes of service-members without court orders.


The Wall Street Journal reported last week that J.P. Morgan Chase & Co. admitted that it had overcharged more than 4,000 military members and foreclosed on 14 homes. Chase is also defending a civil suit in South Carolina from a military member who alleges he was overcharged and seeking punitive damages. Marine Capt. Jonathan Rowles and his wife Julia had a dispute with Chase over their mortgage interest rate. Capt. Rowles was commissioned in 2006 and immediately reported for an active duty assignment.  Pursuant to the SCRA,  the  Rowles’  requested that their interest rate be reduced to 6%. Chase took a few months to respond. The Rowles soon discovered that they were being overcharged by Chase by as much as $900 per month.   Meanwhile, Chase eventually reduced the rate to 6 %.  Almost two years later, the Rowles began receiving collection calls from Chase claiming they owed as much as $15,000 in back interest payments.   Capt. Rowles was paying his mortgage at the reduced interest rate and the bank was wrongly charging him the higher interest rate.  The bank continued to harass him for the money that it claimed he owed. JP Morgan confirmed it would refund $2 million to 4,000 active duty military customers who like the Rowles were overcharged. The Rowles  litigation in South Carolina continues.


As a result of this admission, the U.S. Attorney General has announced that it has several investigations into violations of SCRA. The investigation is attempting to determine which lenders have overcharged and foreclosed against the homes of military members without court orders.


Another abuse by a lender was recently reported by the New York Times. Sgt James Hurley was away at war in 2004   and unable to prevent Deutsche Bank from foreclosing on his home in Michigan. Sgt Hurley sued the bank in 2005. In March 2009, a Federal Judge ruled that the bank’s foreclosure in 2004 violated federal law. Although Sgt. Hurley prevailed in his lawsuit, the lender denies that he is owed damages. Sgt. Hurley fell behind in his mortgage payments, despite his requests to lower the interest payments pursuant to the SCRA.  The bank denied his requests and foreclosed.  Sgt. Hurley is awaiting the outcome of his appeal of the court’s ruling which denied him a trial on the issue of punitive damages. The new owners of his home have declined Sgt. Hurley’s offer to re-purchase his dream home.


Chase has acknowledged that it made mistakes and now has a team in place that is devoted to servicing home loans for military personnel. In   the aftermath of  the media attention, Citigroup, Ally Financial Inc., and Litton Loans have indicated a willingness to regularly check their lending practices to military members.

Please contact Law Offices of Joseph E. Lamendola, Esq. for a free initial consultation. 

The Service Members Civil Relief Act Revisited

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