Holly Petraeus, who will head an office on military issues at the new Consumer Financial Protection Bureau, called on the country’s largest banks to “comply with important legal protections for military personnel.”
In a letter dated Feb. 1, Petraeus, the wife of Army Gen. David Petraeus, urged the banks to “take steps to educate all your employees about the financial protections” in the Servicemembers Civil Relief Act, according to a copy of the letter.
The letter went to 25 banks, including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. It comes less than two weeks after JPMorgan announced it would refund $2 million to military families who were overcharged on mortgages or wrongly lost their homes.
Recipients include: Brian T. Moynihan, Bank of America Corporation; James Dimon, JPMorgan Chase & Co.; Vikram Pandit, Citigroup, Inc.; John G. Stumpf, Wells Fargo & Company; Lloyd C. Blankfein, The Goldman Sachs Group, Inc.; James P. Gorman, Morgan Stanley; C. Robert Henrikson, MetLife, Inc.; Dr. Josef Ackermann, Deutsche Bank AG; Niall S. K. Booker, HSBC North America Holdings Inc.; Richard K. Davis, U.S. Bancorp; James E. Rohr, The PNC Financial Services Group, Inc.; Richard D. Fairbank, Capital One Financial Corporation; Bharat Masrani, TD Bank US; James M. Wells III, SunTrust Banks, Inc.; Michael A. Carpenter, Ally Financial, Inc.; Kelly S. King, BB&T Corporation; Ellen Alemany, Citizens Financial Group, Inc.; O. B. Grayson Hall, Jr., Regions Financial Corporation; Kevin T. Kabat, Fifth Third Bancorp; Henry L. Meyer III, KeyCorp; Frederick H. Waddell, Northern Trust Corporation; Masashi Oka, UnionBanCal Corporation; J. Michael Shepherd, BancWest Corporation; Ellen M. Costello, Harris Financial Corp.; and Robert G. Wilmers, M&T Bank Corporation.
Full text from the letter is below…
Today, I am writing to the CEOs of our nation’s 25 largest banks asking you to ensure that your institutions are complying with important legal protections for military personnel.
As news reports have indicated, one of the nation’s largest financial institutions recently identified mistakes in its servicing of home loans to military personnel that appear to be violations of the Servicemembers Civil Relief Act (SCRA). The SCRA protects military personnel by generally limiting the interest rate to 6% on debts incurred before entering active duty, including mortgage and credit card loans. In the case of mortgages, the reduced interest rate must be applied for a full year after the period of active-duty service. The SCRA defines “interest” to include “service charges, renewal charges, fees, or any other charges (except bona fide insurance)” related to the debt. Additionally, the SCRA generally protects a servicemember’s home from foreclosure while a servicemember is on active duty, with this protection extended for a period of time after the servicemember’s active duty ends.
In view of recent experience, I would urge you to take steps to educate all your employees about the financial protections that the SCRA provides and to review your loan files to ensure compliance. I would also urge you to take other proactive steps.
Where you have reason to believe that a borrower is on active duty – for example, where the borrower has changed his or her home address from a standard street address to an APO or FPO – I would urge you to contact the account holder to determine whether SCRA protections apply.
The SCRA provides important protections for our military families who do so much for our country. I know that you appreciate the importance of these SCRA protections, and I appreciate your assistance in ensuring that your bank does not overlook its obligations – legal and otherwise – to your military customers.
Office of Servicemember Affairs
Consumer Financial Protection Bureau Implementation Team
U.S. Department of the Treasury