Banks Busted For Illegal Foreclosures, Owe Servicemembers $123 Million
The Department of Justice has cracked down on five mortgage servicers for illegally foreclosing on the homes of 952 servicemembers. Now, these financial institutions will have to fork over $123 million dollars as compensation.
Over a period of 6 years, from Jan. 1, 2006 to April 4, 2012, lenders like Bank of America, JP Morgan Chase and Wells Fargo, repeatedly violated Section 533 of the Servicemembers Civil Relief Act, which bans non-judicial foreclosures against servicemembers while in military service, providing that they obtained the mortgage before they entered the military, according to a DOJ press release.
Under SCRA, servicemembers also have unique protections for rental agreements, rent, eviction, interest rates, life insurance and other issues, which come into play for active duty servicemembers and end within 30 to 90 days after discharge.
So far, lenders have been cooperative with the DOJ in either reversing illegal foreclosures or compensating for excess interest charges.
“These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes,” said Acting Associate Attorney General Stuart F. Delery. “While this compensation will provide a measure of relief, the fact is that service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country.”
JP Morgan Chase has agreed not only to return properties free of any debt back to servicemembers they mistreated, but have offered to provide additional compensation for harm suffered. Bank of America has already paid out $35 million dollars to settle with 286 servicemembers.
“We are very pleased that the men and women of the armed forces who were subjected to unlawful non-judicial foreclosures while they were serving our country are now receiving compensation,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We look forward, in the coming months, to facilitating the compensation of additional service members who were subjected to unlawful judicial foreclosures or excess interest charges.”
Continuing violations of the SCRA are often difficult to rectify because of troop deployment, and so in December, Congress extended a particular provision up until January 2016, which protects servicemembers from foreclosure for up to one year after they return from active duty.
“After fighting for our country overseas, our troops shouldn’t have to fight to keep a roof over their heads when they return home,” said Democratic Sen. Sheldon Whitehouse in a press release. “Servicemembers returning from active duty often need time to regain their financial footing, particularly those in the National Guard and Reserves who give up their full-time jobs to fight for our freedom. We should ultimately pass legislation to make this protection permanent, but I’m glad we were able to secure peace of mind for our veterans for one more year.”
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