Biden: Financial Institutions Must Follow Financial Laws Protecting Military Personnel

Date Posted: Thursday, October 3rd, 2013
Categories:  Civil Consumer Protection Department of Justice DOJ Press Releases

DE Attorney General and Iraq war veteran demands information from leading lenders about compliance with the Servicemembers Civil Relief Act and plans to avoid future violations

Wilmington – In light of recent settlements between the federal government and large banks over violations of a law designed to offer financial protections to military personnel, Delaware Attorney General Beau Biden has sent letters to nearly 30 leading lending institutions asking for information about their compliance with the Servicemembers Civil Relief Act.

The letters, which were sent last week and went to credit card banks, mortgage servicers and student loan servicers, demand information about what those lenders are doing to determine whether they have violated the SCRA in the past and what steps they are taking to ensure they are in compliance with the law moving forward.

The SCRA caps interest rates on most loans, including mortgages and credit cards, at 6% and postpones civil proceedings, such as foreclosures and other debt collection lawsuits during a deployment.  The idea behind the SCRA dates back to the Civil War, when President Abraham Lincoln signed legislation protecting Union troops from civil legal actions while they were in the military.

“Our military servicemembers who risk their lives and fight to defend us overseas should not have to worry about additional financial pressures at home.  Their sole focus should be on the mission and returning home safely,” Biden said.  “I personally witnessed the sacrifices that our military makes every day for our country.  The need for full compliance with the SCRA has never been more essential. A soldier in Afghanistan should be lining up for the satellite phone to call a loved one back home, not to call a debt collector who is not following the law.”

In July, Capital One agreed with the United States Department of Justice to pay $12 million to remedy SCRA violations. And late last month, J.P. Morgan Chase also reached a settlement with the federal government that calls for the bank to financially compensate servicemembers for past violations and requires the bank to set up internal procedures to increase its compliance with the SCRA. Biden wants other lending institutions to take similar steps by reviewing past conduct, correcting mistakes and ensuring they are following the law going forward.

“These settlements serve as a reminder that we must remain vigilant in ensuring that our servicemembers receive the benefit of the SCRA’s protections,” said Biden, whose office led the effort in 2012 to ensure the National Mortgage Settlement included provisions strengthening the SCRA and giving more protections to members of the military.

Specifically, the letters Biden’s office sent seek the following information:

  • Documentation of any internal review conducted to determine whether there has been compliance with the SCRA, including documents reflecting the findings of such review
  • All written policies, procedures and practices in place used to verify compliance with the SCRA
  • The total number of customer files reviewed for SCRA compliance, both in Delaware and nationwide
  • Documentation concerning any SCRA violations identified during reviews
  • All written policies, procedures and practices in place concerning the provision of remediation to account owners to address any judgments obtained in error or other actions taken in violation of the SCRA
  • Documentation of steps taken to prevent future SCRA violations
  • All materials used to train employees regarding compliance with the SCRA

To further strengthen protections for troops and their families, Biden also sent letters this week to the chairmen of the U.S. House and Senate’s veterans affairs committees, urging the lawmakers to change federal to allow state attorneys general to prosecute violations of the SCRA.  Granting state Attorneys General this authority, Biden said, would build on provisions in the federal Dodd-Frank banking reform law that provide for both federal and state-level enforcement of federal laws in other consumer protection matters.

“Our troops have been engaged in overseas combat for more than a decade, making strict compliance with the SCRA all the more essential,” Biden wrote in his letter to Congress. “In these times a single violation of the SCRA is one too many.  Those men and women should not be distracted from their mission by having to deal with unnecessary (and illegal) financial conflict at home. … As the chief consumer protectors in our respective states, and the ‘boots on the ground,’ state attorneys general are often the first to hear about abuses in the arena of consumer debt, including abuses of servicemembers.”

Attorney General Biden’s letters to Congress and to financial institutions are attached.  The financial institutions letter was sent to: ACS Education Services, AES/PHEAA, Ally Financial, American Express, Bank of America, Barclay’s, Citibank, Citibank the Student Loan Corporation, Discover, Fifth Third Bank, Ford Motor Credit, GE Capital Retail Bank, HSBC, Nelnet, PNC Bank, Regions Bank, Sallie Mae, Toyota Financial, U.S. Bancorp, USAA, Wells Fargo, Wells Fargo Dealer Services.

Letters provided below:

SCRA Letter to Chair of Senate Committee on Veterans’ Affairs

SCRA letter to Banks

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