Hudson Valley FCU SCRA Settlement: At Least Nine Repossessions Alleged

What happened

On November 2, 2018 the United States sued Hudson Valley Federal Credit Union in the Southern District of New York and resolved the case with a stipulation of settlement whose signature page is dated November 1, 2018. The complaint describes a community-based financial cooperative established in 1963 and based in Poughkeepsie, New York, serving Dutchess, Orange, Ulster and Putnam counties, with total assets of $4.445 billion, total deposits of $3.99 billion and more than 275,000 members as of year-end 2016 (complaint paragraph 3).

The investigation grew out of two private lawsuits in the same court in which servicemembers alleged that the credit union repossessed their vehicles without court orders while they were serving. The U.S. Attorney's Office notified the credit union on December 6, 2016 that it was investigating. The complaint says a soldier and his girlfriend contacted the credit union multiple times to say he was on active duty in the Army and stationed overseas, and it repossessed his car while he was serving in South Korea. It adds that the credit union at least twice rejected servicemembers' requests for SCRA protection (paragraphs 8, 9 and 11).

Until August 2014, according to the complaint, the credit union had no written policy on the SCRA's protection against repossession without a court order, and until late 2014 it did not check the Defense Manpower Data Center for a member's duty status before starting a repossession. From July 3, 2008 through February 19, 2014 it repossessed at least nine servicemembers' vehicles; four of those servicemembers were still on active duty, each with at least seven years of service (paragraphs 1, 10 and 12).

The stipulation records that the credit union revised its SCRA guidelines in 2015 and updated them again on February 15, 2018, and that it neither admits nor denies the allegations. The United States determined that seven repossessions between 2008 and 2014 did not comply with the SCRA (stipulation paragraphs 2 and 10). DOJ's release describes them as seven additional violations its investigation identified. DOJ's case page summary names COPOCO, a different credit union, as the lender that repossessed the vehicles.

The law behind this: 50 U.S.C. § 3952

Protection under installment contracts for purchase or lease: read the statute , or read § 3952 in plain English, with its enforcement record .

Financial institutions must recognize and honor their responsibilities to our men and women in uniform.

Protecting service members is a high priority for this Office and the country.

Who was covered

Seven servicemembers the United States identified, six on a List A and one on a List B, both given to the credit union before the stipulation (paragraph 10). DOJ's release says the List B servicemember's vehicle was repossessed but returned within 24 hours; the stipulation does not state a reason for the smaller amount. Lost equity was to be shared equally by every borrower on the title who signed the release, servicemember or not (paragraph 12). A reservist's early alert period was protected if the repossession fell within it, but it was not treated as military service when deciding whether the loan or a payment came before service (footnote 1).

What the settlement paid

• $65,000 to be deposited in escrow, in an interest-bearing account held at the credit union, which had to top it up if the required payments exceeded it (stipulation paragraph 9).
• $10,000 to each List A servicemember and $5,000 to the List B servicemember, paid only to the servicemember-borrower on the note who signed the declaration and release, plus the vehicle's lost equity, based on its NADA Guide retail price on the day of repossession, and interest on that equity at the 28 U.S.C. § 1961 rate from the sale date (paragraphs 11 and 12). The United States had already reviewed and approved the credit union's calculations. The credit union had 21 days from receiving a signed declaration or release to mail each check (paragraph 16).
• A $30,000 civil penalty within 60 days (paragraph 23). The stipulation records that the credit union had already requested trade line deletions from all three major credit bureaus and any others it reported to; it could neither pursue nor assign the deficiencies, and it owed refunds of any deficiency payments (paragraph 22).
• The agreement ran one year if the credit union located and paid every listed servicemember, otherwise until the payments were made, and no longer than three years (paragraph 34). Money left in escrow at the end of the term was to go to the Treasury (paragraph 18).

Why this case matters

Fixing the policy did not end the case. By the stipulation's own account the credit union had revised its SCRA guidelines in 2015 and again in February 2018, yet the United States still sued over at least nine repossessions made before that. A later procedure did nothing for the members already harmed; the settlement provided for paying them. The 2018 guidelines spell out the check a lender should run: a DMDC search by last name plus either the Social Security number or the birth date, within two business days ahead of a repossession referral, between two and five business days after the vehicle is in hand, and within two business days ahead of its disposal (paragraph 2(a)).