62° Good Morning
62° Good Morning

Behind the military mortgage mess

Mortgage photo illustration

Mortgage photo illustration Photo Credit:

As Chase bank begins giving back $2 million in mortgage overcharges to active-duty military families, you might be wondering how the latest mortgage mess happened.

Chase, one of the nation’s big four lenders, said there was no computerized system to mark loans that fell under the Servicemembers Civil Relief Act, which has been around for decades. This law protects active-duty troops from foreclosures, and when they request it, most active-duty borrowers can get the interest rate lowered to 6 percent on credit card, car, mortgage and other debt.

But without a computerized checkbox or anything of the sort for such mortgages, Chase employees had to resort to less high-tech methods to distinguish federally-protected loans out of millions of other loans.

“These had to be hand labeled,” one bank official said. “There were problems with that.”

After Chase found out about overcharges, bank employees had to review all the loans marked as protected by the federal law, check the dates of active service and then determine if they had to return any money, the lender said.

About 4,000 families will get back some money, said Chase spokeswoman Kristin Lemkau.

She said the overcharges were inadvertent mistakes and not intentional: “While any customer mistake is regrettable, we feel particularly badly about the mistakes we made here.”

Read more of Inside Long Island Business


We're revamping our Comments section. Learn more and share your input.

More news