Hudson Valley Federal Credit Union has agreed to pay the Department of Justice $95,000 following allegations that the lender violated the Servicemembers Civil Relief Act, a law designed by the DOJ to ease financial burdens on servicemembers during periods of active military service.
HVFCU, based in Poughkeepsie, N.Y., allegedly repossessed nine vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders, according to court documents filed Nov. 2.
The credit union resolved the violations without admitting any liability but has agreed to pay $65,000 to compensate seven servicemembers whose cars it unlawfully repossessed and will pay a civil penalty of $30,000 to the United States.
The DOJ began investigating the credit union’s repossession activities from 2008 to 2017 after discovering two private lawsuits filed in the Southern District of New York. After further investigation, seven additional violations were found. In fact, the DOJ discovered HVFCU’s operations did not have any written policies or procedures that addressed the SCRA’s protections against non-judicial auto repossessions.
As a result, HVFCU allegedly failed to check borrowers’ duty status before initiating repossession procedures and rejected servicemembers’ requests for SCRA protection. For example, the court documents note one scenario where a servicemember and his girlfriend contacted HVFCU multiple times to notify the credit union that he was on active duty in the U.S. Army and stationed overseas. While serving in South Korea, HVFCU repossessed his car in spite of his efforts to contact the credit union.
Besides HVFCU’s settlement, the credit union is taking steps to improve its repossession practices, including expanding annual SCRA training to all staff and creating a dedicated link and phone number for servicemembers on HVFCU’s website, the company noted in a press release.
“Protecting service members is a high priority for this office and the country,” said U.S. Attorney Geoffrey S. Berman. “We are pleased that Hudson Valley has taken these remedial steps, and this office will continue to protect the rights of men and women in uniform.”
During the DOJ review period, HVFCU originated 215,000 loans representing more than $9 billion in aggregate borrowings, the company noted in a press release.