An Army attorney has filed a federal lawsuit against a mortgage servicing company alleging its officials violated the Servicemembers Civil Relief Act by overcharging her in interest and fees on her mortgage loan.

Army Capt. Melissa A. Dunkley, stationed at Joint Base Lewis-McChord, Washington, is suing Nationstar Mortgage LLC of Lewisville, Texas. Her attorneys have asked the court to consider it as a class-action lawsuit, alleging that the number is "in the thousands" of service members who have been potentially affected. The lawsuit was filed June 22 in the U.S. District Court in Marshall, Texas.

Nationstar didn't respond to a request for comment on the lawsuit.

Dunkley contends that the company began overcharging her for interest, charged late fees and other charges, and in recent weeks has threatened her with foreclosure. She has received numerous debt collection phone calls, sometimes as early as 5 a.m., according to the lawsuit. Over the last two years, she has battled with the company.

Under the SCRA, a 6 percent cap applies to loans that service members incurred before entering active duty — whether that's Guard and Reserve members called to active duty or service members who took out their loans before entering the military. If the service member's interest rate is higher than 6 percent, the service member can request the reduction to 6 percent by providing written notice and a copy of military orders to the creditor.

Dunkley bought her house in Topeka, Kansas, in July 2008 with a mortgage loan rate of 6.5 percent, when she was a civilian. In July 2009, she was commissioned as an officer in the Kansas Army National Guard. In 2011, she deployed to Afghanistan, serving as a judge advocate, and requested the interest rate reduction from Bank of America, which was servicing her loan at the time. It reduced the rate to 6 percent.

In September 2012, after applying to transfer to full-time active duty in the Army, she left the Guard and became an active-duty Army officer the next day. All this time, the mortgage servicing companies continued to allow her the 6 percent rate.

Mortgage servicing companies, often separate from the mortgage lender, handle the routine tasks of managing the loan, such as collecting the payments from the borrower and handling the escrow account associated with the loan.

When Nationstar Mortgage took over the servicing of her loan in June 2013, it continued to honor the 6 percent rate. But in May 2014, Dunkley alleges, Nationstar said she was no longer entitled to the protections of the SCRA because her orders didn't have an "end date" or termination date despite the fact that she is an active-duty officer. Since that time, Dunkley "has written countless letters, sent innumerable faxes and emails and endured dozens of telephone calls from the defendant concerning the interest rate on her promissory note and her payments on the debt," according to the lawsuit.

"The various responses [Dunkley] has received directing her to submit and re-submit her orders and other documents to [Nationstar] make it abundantly clear that no one who understands anything about the SCRA is reading her letters and/or emails, because the responses are either generic computer-generated responses, or do not in any way respond to the correspondence they reference," the lawsuit states.

If financial institutions are not including specifics about the SCRA in their policies and procedures, and if they haven't conducted training for their personnel, these financial institutions could wind up in the same "death spiral" that some banks found themselves in during the past decade, said John Odom, a retired Air Force colonel and one of the attorneys representing Dunkley. One of the results was the SCRA portion of the 2012 settlement known as the National Mortgage Settlement, in which 2,413 service members received a share in a settlement of more than $311 million from mortgage servicers JP Morgan Chase, Wells Fargo, Citi, GMAC Mortgage and Bank of America.

That settlement addressed alleged violations of the SCRA between Jan. 1, 2006, and April 4, 2012, in which the servicers foreclosed, without a judicial proceeding, on homes without a judicial proceeding, of service members who originated their mortgages before their period of military service or whose servicers obtained a default foreclosure without filing a proper affidavit with the court stating whether the homeowner was in the military.

"I've maintained consistently since the 2012 first settlement that if you order them to revise their policies and procedures to comply with the SCRA, they must make sure whoever's writing those policies and procedures knows what they're doing," Odom said.

"I have very little confidence that's happening. If we get into the same high ops temp, it's a very real possibility it will happen again." While there may be few people who have a mortgage interest rate higher than 6 percent these days, there is the possibility of other violations, such as lenders or servicers obtaining default foreclosures without determining whether the homeowner was in the military.

The Dunkley lawsuit asks the court to stop Nationstar from further violating the SCRA; to require Nationstar to remove any adverse credit reporting they may have made as a result of overcharging the interest; and to award monetary damages against Nationstar.

Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at

Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.

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