Banks Sucker Punch Military Families

As part of the work on resetting the economy, North Carolina United Power and the IAF-SE have been pressing for banks to obey the law in dealing with loans to military personnel.  The law, revised in the past decade, says that when soldiers are on active duty, all of their loans must be capped at 6%, and any existing interest above that level must be forgiven.  Moreover, when they are on active duty and three months beyond, a bank cannot start foreclosure proceedings or other debt recovery strong-arm tactics. 

We took up this cause because we were hearing many stories about how banks were not following these laws.  And that does not even take into account all of the predatory lenders, loan sharks, and such who open for business just outside the gates of military bases.

We made good progress in these negotiations with big banks and with NC government officials.  Bank of America was especially responsive, offering unilaterally to extend the grace period law demands from three months to nine months.  By doing so, they give room for the new shape of military deployment which relies heavily on National Guard and Reserves and which has led to numerous sequential tours of duty.  The law did not anticipate this change, and it has hurt many military personnel whose cases have not been handled correctly.

In case anyone wondered whether this is a real problem, a recent news article points out that at least one major bank, has admitted to breaking the law in dealing with military families.  J.P. Morgan Chase was foreclosing on military families while they were bearing the weight of active deployment.  The article names only a few cases.  I suspect that a committed investigative reporter would find many, many more at all major banks, in regional and local banks, and an explosion of cases among payday lenders, car title lenders, and other criminally conceived businesses trying to fly under the radar.

Let me again acknowledge Bank of America for its promises to improve services and go beyond the letter of the law in working with military families.  We have had some hopeful conversations with Wachovia-Wells Fargo who has had experience operating a specialized military bank out of San Antonio, TX, but they have not made any commitments in response to our requests.  Obviously, J.P. Morgan Chase has had to come clean on a few cases.  I hope some other groups working toward economic justice will raise these questions locally to stop the sucker punching on these families who already face stress and problems beyond what anyone should have to face.