Our nation’s military forces are devoted to a life of service, protecting our families and our country. Why do them a disservice? The Service Members Civil Relief Act (SCRA) is the federal law that protects our service members against civil actions (ie: lawsuits) that may affect their legal rights while on active duty. SCRA compliance for any organization is not an elective course of action. It is critical to the success of your company.
Mortgage Compliance Magazine covers the general five questions regarding SCRA, but as a quick overview, the law protects against installment contracts, credit card, mortgage and auto interest rates, mortgage foreclosure, car repossession and civil court proceedings. Before executing civil actions, companies have to follow compliance rules to ensure that the client isn’t protected by this federal law.
This year, the hits just keep on coming for Wells Fargo. CNN Money reports that on top of licking their wounds from the public outrage over the creation of +2 million fake accounts, the bank owes +$24 million to cover settlements with the Justice Department. A chunk of $4.1 million is to cover the charges of seizing over 400 cars owned by active military, and the additional $20 million is charged by the Office of the Comptroller of the Currency for rejecting or ignoring service members’ banking protections.
While this particular case is concerned with illegal repossessions occurring between 2008 and 2015, the OCC stated that Wells Fargo’s SCRA violations began back in 2006. Representatives for Wells Fargo asserted that they “have been notifying and fully compensating customers and will complete this work in 60 days.” $10,000 is owed to all affected service members in addition to correcting damaged credit, and shareholders, customers, and former employees are now emerging with lawsuits as well. The CEO has been accused of “running a criminal enterprise,” and the corporation remains under federal scrutiny.
Ending up in the same doghouse as Wells Fargo, “after a $1.9 billion fine and more than two years of oversight,” HSBC Bank scrambled to become compliant with laws monitored by the Justice department, and still fell short, according to this Bloomberg article from April 2016. The company was given a five-year window to fix their abundance of compliance violations, and this past month another SCRA infringement came to light. On August 11th, the Justice Department released a statement concerning HSBC’s latest violation: the company now owes $434,500 to settle charges over repossessions occurring between 2008 and 2010.
Referencing Finance & Insurance Magazine’s post detailing the proceedings, HSBC conducted repossessions without court orders, even when it had evidence that suggested the possibility that a borrower could be a protected service member. Principal Deputy Assistant Attorney General, Vanita Gupta, summed up the case perfectly: “Service members should never have to worry that they will lose their cars while they answer our nation’s call to duty…HSBC should have heeded these concerns before repossessing vehicles.” F&I goes on to point out the major flaw in HSBC’s compliance technology is that it “requires a great deal of work,” and the organization processed a lot of missing or flawed data.
HSBC is not the only institution violating SCRA compliance laws. As pointed out in SCRA Compliance is Not Optional for Debt Collectors, “Debt Collection has always been a challenging industry, with “performance” being a key metric of success. Today, with the onslaught of federal and state regulation, “compliance” seems to be the ONLY metric of interest.” While the article was posted March of 2013, the theme of compliance over all is no less relevant.
Financial giant, Capital One, underwent investigation and had to compensate for almost $7 million in damages as well as create funding in the form of $5 million for the service members affected by the compliance violations ranging from 2006-2011. Capital One had collected debts owed regarding foreclosures, credit lines, and vehicles, as well as foreclosed on homes and repossessed cars without court orders and failed to ensure that their targets weren’t protected service members.
Bank of America found themselves in a similar sticky situation back in 2006. According to a post in the Consumerist last year, “Bank of America took improper legal action against military customers for delinquent credit card accounts and overdrafts.” Violating SCRA practices had the big bank owing $3 million for military relief. Bank employees filed court documents without notarization, had no relevant knowledge of the delinquencies that they were acting against, and administration teams lacked the proper training for document processing. BOA was ordered to guarantee that military service status is verified from now on by the appropriate channels.
Continuing to find discrepancies with big banks, last year the Department of Justice released a statement on a +$123 million settlement with “five of the nation’s largest mortgage servicers” that all had investigations undertaken due to not coming in line with SCRA compliance. The foreclosures that had taken place ranged between January 2006-April 2012.
“These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes,” said Acting Associate Attorney General Stuart F. Delery. “While this compensation will provide a measure of relief, the fact is that service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country. The department will continue to actively protect our service members and their families from such unjust actions.”
Having an automated reliable solution in place is paramount– you don’t want to take selective action. SCRA violations often top the list of complaints reported by consumers to the CFPB and OCC. Having an automated, reliable, SCRA Compliance Scrub solution not only eliminates additional costs and regulatory burdens associated with the failure to follow SCRA guidelines, it’s critical to your business success.
