FORT WORTH, Texas ― In the past few months, several major financial institutions have been slapped with millions of dollars in fines for violations of the Servicemembers Civil Relief Act. While the focus has largely been on mortgage foreclosure proceedings, auto-repossession procedures are on the Department of Justice’s radar, according to a compliance panel at the National Automotive Finance Association conference earlier this month.
“The Department of Justice, the Federal Reserve Board, the Consumer Financial Protection Bureau ― everyone is on the bandwagon and wants to investigate SCRA compliance,” said panelist Brian Becker, vice president and assistant general counsel at BB&T Corp. “If you haven’t been examined lately, you need to assume this is coming. You need to be ready to show them how you are in compliance.”
The SCRA was first enacted to protect servicemembers in World War I. Overhauled in 2003 and tweaked last year, the act suspends certain civil obligations and protects against default judgments to enable military personnel to devote full attention to duty and relieve stress on family members.
In April, DOJ lawyers identified four enforcement priorities, which included auto repossessions. Also, Becker cited a Feb. 1 letter penned by Holly Petraeus, director for the CFPB’s Office of Servicemember Affairs, which urges lenders to beef up their SCRA compliance. The one-page communication, sent to BB&T and 24 other of the nation’s largest banks, calls for financial institutions 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.”
In a letter on the OSA’s web site, Petraeus clearly states the agency’s plan for SCRA enforcement. “When we find out about people breaking consumer financial protection laws to harm servicemembers, we’ll help CFPB enforcement teams take action against them,” she writes. “And we plan to make it easy for military personnel and their families to contact the CFPB with questions or complaints about consumer financial products and services.”
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This is a another great example of how the banking industry has desended into a cesspool. Most legislation is passed IN RESPONSE to abuse. Have you driven around a military installation in the US in the last decade and observed all of the “payday lenders” making a fortune off of the backs of servicemembers? Who is bankrolling the payday lenders? Could it be a commercial bank?
In the year 2000, some colleagues and myself questioned a senior executive at the New York Fed about the banking sysstem supporting this payday lending travesty. He responded that they “were concerned”; but, nothing happened. Eventually, IN RESPONSE, legislation occurred to provide a path to resolution and redress. Any bank that is guilty of this is a “Bad Corporate Citizen”.
Marcie, thanks for posting this. I hope that all invoved in all forms of consumer credit at banks read, weep, and remember to look at their fellow bankers and ask “How are you helping America become a better country?” Certainly not by abusing laws or trying to ignore them.
If the idea that the borrower’s OnStar (or whatever) system could be used to disable the car based on some third party’s claim was very explicitly disclosed upfront and if the borrower explicitly agreed in writing, then maybe someone could offer it. Without full disclosure and consent it would be a legal nightmare for OnStar or whomever.
The typical deep sub-prime borrower who requires GPS monitoring only agrees to it because they have no other choice. Borrowers with no choice have to live with the Big Brother aspect. Anybody with a choice would probably be appalled at the idea and either opt out or shop elsewhere.