No harm - no foul, if the borrower wasn't protected. But you may have dodged a bullet because if the borrower was protected and later claimed they were not aware of their rights and were pressured to do this by the bank, it could be messy.
You should ensure procedures correctly put the status verification before taking the property.
I believe a title surrender is possible, but I'd want an iron clad, counsel reviewed statement from the borrower that they are aware of their rights under the SCRA and it is at their request that the bank take the property...
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell