Kerry Seeks Answers on Servicemembers Facing Foreclosure
Senator John Kerry (D-Mass.), author of the S. 4058, the Helping Heroes Keep Their Home Act, today authored a letter to Federal Reserve Chairman Ben Bernanke seeking answers on recent reports that banks have overcharged and foreclosed on thousands of military families.
"I ask that the Federal Reserve immediately investigate the extent to which military families are being overcharged on their mortgages and have been improperly foreclosed upon," Kerry wrote in the letter. "I also request that any evidence of overcharging be sent to the Department of Justice for further investigation of any failure to appropriately comply with the SCRA. We must do everything possible to ensure that those who have sacrificed in Iraq and Afghanistan don't lose their home simply because of the time and financial sacrifice they made in the course of their service to our nation."
Kerry's legislation, which provides enhanced protections for servicemembers and military families against foreclosure and increased interest rates as part of the Servicemembers Civil Relief Act (SCRA), was signed into law on December 29, 2010, days before the program was set to expire. The SCRA extends protections Senator Kerry previously enacted into law to expand protections from foreclosure for nine months after active duty servicemembers return home and provide one year relief from increases in mortgage interest rates. Senator Kerry's legislation extends the program for an additional two years.
The full text of the letter is below:
January 18, 2011
The Honorable Ben S. Bernanke
Board of Governors of the Federal Reserve
Constitution Avenue and 20th St. N.W.
Washington, D.C. 20551
Dear Chairman Bernanke:
I am troubled by numerous media reports that suggest that financial institutions may have overcharged military families for their mortgages and improperly foreclosed on military families. As I understand it, JP Morgan Chase & Co has admitted to overcharging approximately 4,000 military families and foreclosing on a dozen military families. Given this news, I am writing to ask you to investigate the extent to which financial institutions have been overcharging and improperly foreclosing on members of the National Guard and Reserves who have been called up to active duty and their families.
A recent report by the National Consumer Law Center found the following: "Military personnel are ripe targets for consumer predators because many are low-income (always the most targeted group) but have a far longer list of economically-attractive qualities than most low-income people. Periods of deployment like those for the recent war in Iraq are especially vulnerable times. And military conduct codes that stress the need for orderly personal lives, including orderly finances, may inadvertently be driving service people toward the quick fixes many consumer predators offer." For the members of the National Guard and Reserves, sporadic civilian work due to calls to service and low military pay have forced families to obtain subprime or predatory loans to buy a home.
The Servicemembers Civil Relief Act (SCRA) helps members of the military and their families deal with the special financial burdens associated with serving their country. I was pleased to author and help enact legislation in the 110th Congress to expand protections under SCRA to cap mortgage interest at an annual rate of 6 percent from the time servicemembers are called up to active duty until one year after they return home. Likewise, this legislation also stops foreclosure proceedings against military families while the servicemembers are called to active duty until nine months after they return home. I am also pleased my legislation to provide a two year extension of these provisions was signed into law by President Obama in December 2010.
Unfortunately, even with these protections, it appears that too many of our brave soldiers fighting in Iraq and Afghanistan may still find themselves being overcharged for their mortgages and are returning to find that their homes are in danger of foreclosure.
Therefore, I ask that the Federal Reserve immediately investigate the extent to which military families are being overcharged on their mortgages and have been improperly foreclosed upon. I also request that any evidence of overcharging be sent to the Department of Justice for further investigation of any failure to appropriately comply with the SCRA.
We must do everything possible to ensure that those who have sacrificed in Iraq and Afghanistan don't lose their home simply because of the time and financial sacrifice they made in the course of their service to our nation.
Thank you in advance for your consideration of this request.
John F. Kerry
CC: The Honorable Eric H. Holder, Jr., the Attorney General of the United States
The Honorable Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau