Bank Of America Wrongfully Foreclosed On Service Members: Will Now Pay In The Millions

Military foreclosures found faulty; image by Randy Davey @AvidLawBlog

Military foreclosures found faulty; image by Randy Davey @AvidLawBlog

It’s been a long slog for a group of service members fighting to keep their homes while serving in the military of this great United States. Between the years of 2006 and 2010, a particular group of over 300 military members were served foreclosure notices, resulting in the accrual of greater debt, home equity lost, and the general stress of wondering if one’s home was going to be pulled out from under them while on active military duty.

The Justice Department didn’t like the sound of what was going on and got involved and in 2011, a settlement was reached with Bank of America to compensate 142 of those military members for wrongful foreclosures. A win, certainly, but the investigation continued and after the Bank of America handed over information about additional foreclosures made between mid-2009 and 2010, it became clear that 155 more service members had been impacted. The Justice Department added these parties to the settlement, making the amount Bank of America (and to a lesser extent, Morgan Stanley) will pay out for illegally foreclosing on 300+ service members the robust amount of $36.8 million. From Reuters:

Each of 316 service members will receive at least $116,785, plus compensation and with interest, for any home equity lost.


The payout follows the 2011 settlements the Justice Department reached with BAC Home Loans Servicing LP, a subsidiary of Bank of America, and Saxon Mortgage Servicing Inc, a subsidiary of Morgan Stanley, for alleged violations of the Servicemembers Civil Relief Act.

The Act allows members of the military to postpone or suspend certain financial obligations, such as outstanding credit card debt and mortgage payments.


“Our men and women in the military should not have to worry about a bank foreclosing on their home while they bravely serve our country,” Eric Halperin, Special Counsel for Fair Lending in the Civil Rights Division, said in a statement.

While clearly this is a victory for the 300+ families involved, and $116,785 will go a long way toward righting the wrongs done, there are potentially 5000 service members who were also impacted by illegal foreclosures. Back in November of 2011, Think Progress wrote a piece laying out the egregious actions of a number of banks and lending facilities that hit a significant number of military families:

For months, major banks have been dealing with the fallout of the “robo-signing” scandal, following reports that the banks were improperly foreclosing on homeowners and, in many instances, falsifying paperwork that they were submitting to courts. Banks have been forced to go back and re-examine foreclosures to ensure that homeowners did not lose their homes unlawfully.

In the latest episode of this mess, the Office of the Comptroller of the Currency has found that banks — including Bank of America, Wells Fargo, and Citigroup — may have improperly foreclosed on up to 5,000 active members of the military.

The investigations that followed resulted in the Justice Department looking into the lending and accounting practices of Bank of America and others mortgage servicers, and the violations of the Servicemembers Civil Relief Act, which provides certain financial protections to military members, were discovered, leading to this recent settlement.

The Bank of America is already paying out on this first settlement of $36.8 Million, but the Justice Department is not done looking into the matter:

Under the second settlement, Saxon Mortgage Services Inc. is in the process of paying out some $2.5 million to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010.

The Justice Department is overseeing audits of the country’s five largest mortgage servicers – Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally – to identify violations of the Servicemembers’ act foreclosure provisions between Jan. 1, 2006 and April 4, 2012.

Which means it’s likely there will be other settlements to come… and other service families to be rightfully compensated for the illegal – and unconscionable – foreclosures of their homes.


LDW_AI

 

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