Sad state of affairs of our fighting men and women

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From the New York Times. Some Creditors Make Illegal Demands on Active-Duty Soldiers By DIANA B. HENRIQUES Published: March 28, 2005 Sgt. John J. Savage III, an Army reservist, was about to climb onto a troop transport plane for a flight to Iraq from Fayetteville, N.C., when his wife called with alarming news: "They're foreclosing on our house." Sergeant Savage recalled, "There was not a thing I could do; I had to jump on the plane and boil for 22 hours." He had reason to be angry. A longstanding federal law strictly limits the ability of his mortgage company and other lenders to foreclose against active-duty service members. But Sergeant Savage's experience was not unusual. Though statistics are scarce, court records and interviews with military and civilian lawyers suggest that Americans heading off to war are sometimes facing distracting and demoralizing demands from financial companies trying to collect on obligations that, by law, they cannot enforce. Some cases involve nationally prominent companies like Wells Fargo and Citigroup, though both say they are committed to strict compliance with the law. The problem, most military law specialists say, is that too many lenders, debt collectors, landlords, lawyers and judges are unaware of the federal statute or do not fully understand it. The law, the Servicemembers Civil Relief Act, protects all active-duty military families from foreclosures, evictions and other financial consequences of military service. The Supreme Court has ruled that its provisions must "be liberally construed to protect those who have been obliged to drop their own affairs to take up the burdens of the nation." Yet the relief act has not seemed to work in recent cases like these: ¶At Fort Hood, Tex., a soldier's wife was sued by a creditor trying to collect a debt owed by her and her husband, who was serving in Baghdad at the time. A local judge ruled against her, saying she had defaulted, even though specialists say the relief act forbids default judgments against soldiers serving overseas and protects their spouses as well. ¶At Camp Pendleton, Calif., more than a dozen marines returned from Iraq to find that their cars and other possessions had been improperly sold to cover unpaid storage and towing fees. The law forbids such seizures without a court order. ¶In northern Ohio, Wells Fargo served a young Army couple with foreclosure papers despite the wife's repeated efforts to negotiate new repayment terms with the bank. Wells Fargo said later that it had been unaware of the couple's military status. The foreclosure was dropped after a military lawyer intervened. Little-Known Legislation The relief act provides a broad spectrum of protections to service members, their spouses and their dependents. The interest rate on debts incurred before enlistment, for example, must be capped at 6 percent if military duty has reduced a service member's family income. The law also protects service members from repossession or foreclosure without a court order. It allows them to terminate any real estate lease when their military orders require them to do so. And it forbids judges from holding service members in default on any legal matter unless the court has first appointed a lawyer to protect their interests. The law is an updated version of the Soldiers' and Sailors' Civil Relief Act, which was adopted on the eve of World War II and remained largely unchanged through the Persian Gulf war of 1991. But in July 2001, a federal court ruled that service members could sue violators of the relief act for damages. And the terrorist attacks on Sept. 11 prompted Congress to take up a long-deferred Pentagon proposal to update the old act. The revised statute, clearer and more protective than the old one, was signed into law in December 2003. But the news was apparently slow in reaching those who would have to interpret and enforce the law. "There are 50,000 judges in this country and God knows how many lawyers," said Alexander P. White, a county court judge in Chicago and the chairman of one of the American Bar Association's military law committees. "Are people falling down on the job - the judges, the bar, the military? Probably." And broad understanding of the law "is not going to happen overnight." Military lawyers, credit industry organizations and some state courts and bar associations have also tried to spread the word about the new law. But these efforts are not enough, said Col. John S. Odom Jr., retired, of Shreveport, La., who is a specialist on the act. "What we need is a way to reach Joe Bagadoughnuts in Wherever, Louisiana," he said. "Because that's where these cases are turning up." One reason they are surfacing in unlikely places is the Pentagon's increased reliance on Reserve and National Guard units that do not hail from traditional military towns, said Lt. Col. Barry Bernstein, the judge advocate general for the South Carolina National Guard. When these units are called up, he said, their members find themselves facing creditors and courts that may never have dealt with the relief act. As a result, some service members heading off to war have confronted exactly the kinds of problems the law was supposed to prevent. The Coast Guard alone handled more than 300 complaints last year; military law specialists say the numbers are probably higher in the branches sending troops abroad. Financial Difficulties Sergeant Savage's lender eventually dropped its foreclosure against him after receiving repeated warnings from military lawyers at Fort Bragg, N.C. But damage was done. The foreclosure dispute remained on his credit history, hurting his ability to revive his struggling wireless Internet connection business when he returned home to Asheboro, N.C., he said. By then he had retired on full disability after being seriously injured while working on a sabotaged electrical system at the former Baghdad Convention Center. Sergeant Savage has not let the matter end. Represented by Colonel Odom, he has filed a lawsuit in federal court in Greensboro, N.C. He says the EverHome Mortgage Company, a unit of the EverBank Financial Corporation in Jacksonville, Fla., violated the relief act by failing to cap his mortgage at 6 percent, wrongfully initiating foreclosure and, after dropping the foreclosure, failing to remove information about it from his credit history. The mortgage company denied that it violated the act or treated Sergeant Savage unfairly. His case "has unique and extenuating circumstances" that will be raised when the dispute comes to trial, Michael C. Koster, EverHome's president, said in a written statement. "We are confident that court documents will reveal that EverBank treated Mr. Savage equitably and worked diligently to resolve this matter," Mr. Koster said. Extent of Coverage When Sgt. Michael Gaskins of Fort Hood, Tex., was sent to Iraq last April, his wife, Melissa, was left to cope with a dispute over a delinquent loan from the Tallahassee Memorial Hospital credit union; the couple took out the loan just before Sergeant Gaskins enlisted in November 2001. When the credit union took the couple to court in Texas last year, a military lawyer at Fort Hood alerted the local judge that the new relief act required that the case be deferred because Sergeant Gaskins was abroad. But on Feb. 18, a county court judge in Gatesville, Tex., ruled that Mrs. Gaskins had lost the case by default. She was ordered to pay the credit union more than $6,000 and turn over the family truck, which secured the loan. Colonel Odom, who is also representing the couple, is trying to have the default judgment overturned, in part on the ground that the relief act protects spouses as well as service members. The credit union in Tallahassee, Fla., disputes that. "It's our position the act does not protect her," said Palmer Williams, a lawyer for the organization. Judge Susan R. Stephens, the county judge who signed the default judgment, said she did not think that Mrs. Gaskins had ever invoked the relief act but said she would review the matter when it came before her. The relief act was also supposed to prevent the kind of situation that the marines returning to Camp Pendleton faced when they discovered that their cars and other possessions had been sold to cover towing and storage fees. "The act says you need a court order to do that, and you can't get a court order without notice to the service member," said Maj. Michael R. Renz, director of the joint legal assistance office there. "I've got six attorneys here, and each one of us has handled at least two or three of these cases within the last eight months." 'I'm Not Sleeping' Stephen Lynch, a civilian lawyer for the Coast Guard in Cleveland, said he had stepped in repeatedly over the past year to help service members invoke their rights under the act. One of them is a young soldier sent to east Asia, leaving a wife and two children at home in northern Ohio. His periods of unemployment and the death of a newborn daughter last July left the young family struggling financially. Their situation was aggravated by delays in the processing of his first military paychecks, said Mr. Lynch, who asked that the couple's name not be used because their debt problems could hurt the soldier's career. The soldier's wife said she had tried for months to renegotiate their mortgage with Wells Fargo Home Mortgage. But on March 8, just three weeks after paying the bank $3,000 that the U.S.O. had raised on her behalf, she was served with foreclosure papers. "I'm having anxiety attacks," the wife said in an interview that night. "I'm not sleeping." She said she was especially worried about how much to tell her husband. "The other military wives I've spoken to all say, 'Don't let them know you're upset; don't let them hear you cry.' " Kevin Waetke, a spokesman for Wells Fargo, said the foreclosure action was dropped as soon as Mr. Lynch contacted the bank's lawyers. The bank had not known the couple was eligible for relief, he said. Different Experiences A Coast Guardsman, Kevin Cornell, was baffled by his experience with Citigroup's credit card unit. When he enlisted, he had a Citibank card and another from Sears, whose credit card operations Citibank acquired in late 2003. When he applied last fall to have the interest rates on both cards capped at 6 percent, Citibank did even better: it cut the rate on his pre-enlistment balance to zero. But the Sears card was another story; a different Citibank employee refused to make the interest rate cut on that card retroactive to his date of enlistment, as the new relief act requires. Again, Mr. Lynch intervened. But he said he wondered how many other service members had been misinformed. Janis Tarter, a spokeswoman for the bank, said the company's policy was to go beyond the requirements of the relief act on all its credit cards. "We regret the difficulty that our customer encountered," Ms. Tarter said. "It is not representative of the level of service we work to provide." Burden of Enforcement Some problems that military personnel are confronting suggest that the new law may need more work by Congress. For example, although mandatory arbitration clauses are becoming increasingly common in credit agreements, arbitration is not even mentioned in the relief act. But the biggest problem, both bankers and military lawyers say, is that the enforcement of the act rests initially on the shoulders of the service members themselves. They must notify their creditors or landlords of their military status to invoke their rights under the act. It is one more chore for a soldier getting ready for overseas duty, and it often does not get done properly. And if a landlord or creditor, out of ignorance or intransigence, refuses to comply with the act, the service member may not have the time or money to fight back, said Capt. Kevin P. Flood, a retired Navy lawyer. "Sure, if you take them to court and win, you can even collect damages," Captain Flood said. "But most of our people are not in that position. They are just regular Joes, and they don't have the money to hire a lawyer."
 
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Its not that they dont know about it, they choose not to be aware of it. These companies should be put out of business. No wonder bankers or bank employees are no longer respected much any more. Dan
 

Win

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In Arkansas, there is a statute providing for a mandatory stay of proceedings against active duty service members, provided the stay is invoked in the manner provided by the statute. The statute is A.C.A. 12-62-406. A JAG told me of this statute, which I used to stay a proceeding against a client. Hope this helps if anyone in this state needs it ....
 
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So how do the banks deal with the law preventing foreclosures then? Do they simply start charging a higher risk premium on loans given to members of the armed services, in order to recoup some of their losses because of the law? The cap is 6% during active duty -- but is there a special risk premium charged to armed forces members when they are *not* on active duty? Banks, as we all know, have a fudiciary duty to their shareholders, not their countries, so they definitely would want to recoup their losses somehow. I know it is dispicable to be treating our armed servicemen and women this way, but sometimes these laws can be double-edged swords. Also, landlords might be more reluctant to rent to servicemen because of the law, or if they do rent, they might end up charging a higher rent as an implied risk premium.
 
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So I guess the idea that one makes a profit because you do good for the community you do business in is a lost philosophy. Now its just rape, pillage, burn and then move on to the next sucker. My, how business has changed. Dan
 
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quote:
Originally posted by Dan4510: So I guess the idea that one makes a profit because you do good for the community you do business in is a lost philosophy. Now its just rape, pillage, burn and then move on to the next sucker.
Yup, I know, its sad. Do you have any evidence, anecdotal or otherwise, that banking institutions and landlords are actually extracting a 'risk premium' from US servicemen because they might be subject to prohibitions against foreclosures and/or the calling of loans?
 

Gary Allan

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quote:
have a fudiciary duty to their shareholders, not their countries, so they definitely would want to recoup their losses somehow.
Well can I recoup my tax burden losses from the S&L crisis?? I think the tab was $3500 for every member of the population. ..but beyond that.. It's just the cost of doing business in the USA. We end up paying anyway ..so what do they care? They just haven't got around to closing enough loop holes so that they can "win:win". If the losses are truly so astonomical ..everyone will feel the ripple effect. I can't see, given the relatively small number of our armed forces, that they're even a blip on the spread sheet radar. That is, given our volitile economy ..they probably lose much more in legit bad debt.
 
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Originally posted by Gary Allan: but beyond that.. It's just the cost of doing business in the USA. We end up paying anyway ..so what do they care? They just
They care because they are fudiciarily bound to only look out for the best interests of their shareholders. No one else matters really. Do you think the Halliburtons, the GE's, the XOM's, and the Boeing's of the world really care about Americans when they engage in the business of military supply to the US Government? Absolutely not. They exist and carry out business for one reason, and one reason only -- to make profits for their shareholders. Probably the point I was trying to make in my post was that, despite these laws existing, banks will still find ways to take advantage of servicemen and servicewomen. Congress enacting a law to prevent foreclosures/calling of defaulted loans will only end up in a higher risk premium for *all* US servicemen/women, not just those who are unable to appropriately manage their domestic fiscal affairs. [ March 31, 2005, 03:01 AM: Message edited by: pitzel ]
 
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quote:
Originally posted by pitzel:
quote:
Originally posted by Dan4510: So I guess the idea that one makes a profit because you do good for the community you do business in is a lost philosophy. Now its just rape, pillage, burn and then move on to the next sucker.
Yup, I know, its sad. Do you have any evidence, anecdotal or otherwise, that banking institutions and landlords are actually extracting a 'risk premium' from US servicemen because they might be subject to prohibitions against foreclosures and/or the calling of loans?

Yes, I can actually, the servicemen that are being done that way are paying the premium in having their affairs torn apart for the sake of profit. Also, there may be fiduciary duty to shareholders but there are social costs of infrastrastucture that supports these businesses. And all business imposes costs on others that no one seems to want to address. Businesses are getting a free ride and the taxpayer pays the cost. The most of quoted motto of business today is "socialize costs, privitize profits." Any way you interpret that is they want all others to pay their cost of doing business while they reap the profit. This is not capitalism, this is nothing more than the old model of fuedalism. Stewardship seems to be a lost idea among the corporate elite these days. I repeat: rape, pillage, burn and move on to the next sucker who will hold still. Dan
 

Gary Allan

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This is not capitalism, this is nothing more than the old model of fuedalism.
Well said. When all the chips appear to fall on the same people ...you kinda begin to understand that "the fix is in".
 
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Many Military members belong to USAA which caters only to military. The main reason is they take care of military and know our lives and they provide excellent services. Their insurance rates beat most other companies hands down and their handling of claims is outstanding. I know a few people who have had problems with USAA but not on the magnitude of what has occured in the examples. The RISK premium you mention is paid by all of us for the honor of having a few men and women of this nation risk and give up their lives so you can do what ever you wish. This nation is truly great because of a few who work hard to defend our freedom. DO NOT EVER FORGET THAT!!
 
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Originally posted by flynavydiesel: The RISK premium you mention is paid by all of us for the honor of having a few men and women of this nation risk and give up their lives so you can do what ever you wish.
I apologize, I meant absolutely no disrespect by my comment whatsoever regarding any form of 'risk premium'. As a person who lives in a town that has an AFB and has many friends and neighbours in the AF, I am glad to hear that the majority of businesses, landlords, and financial institutions are respectful of the committment the men and women of the armed forces make not only to their country, but for the continued freedom of the free world.
 
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