John Mayer's Real Estate Blog: Memorial Day Present: Two firms to pay for improper military foreclosures

Memorial Day Present: Two firms to pay for improper military foreclosures

The banks have sunk to a new low and it has finally come back to bite them.

 

Two firms to pay for improper military foreclosures:

WASHINGTONMay 27, 2011 – Two mortgage lenders will pay more than $22 million combined to settle federal civil charges that they improperly foreclosed on 178 military personnel, some of whom were serving in the Iraq or Afghanistan wars.

Subsidiaries of Bank of America Corp. and Morgan Stanley failed to obtain court orders before imposing the foreclosures between 2006 and 2009, the Justice Department said Thursday. The cases will result in an average of $125,562 in payments per person. The foreclosed homes were in 22 states.

The settlement is “easily the largest amount recovered” in a case of improper military foreclosures, said Thomas E. Perez, an assistant attorney general.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” Perez said.

Among those foreclosed upon were several service members who had been wounded or who suffered from post-traumatic stress disorder, officials said. One involved an
Iraq war veteran who was foreclosed upon while he was receiving counseling for nightmares and “nervous conditions” stemming from his service.

Under the settlement, Perez said, the lenders agreed to create additional mortgage loan protections for military personnel.

The Bank of America subsidiary, BAC Home Loans Servicing, formerly known as Countrywide Home Loans Servicing, and the Morgan Stanley subsidiary, Saxon Mortgage Services, also agreed to look into possible cases of improper foreclosures from the summer of 2009 through 2010.

The law the lenders were accused of violating, the Servicemembers’ Civil Relief Act, provides protections to military personnel. Under the law, they can’t be evicted and creditors can’t seize their property while they’re on active duty.

The Justice Department began its investigation earlier this year after separate inquiries from the U.S. Marine Corps and Sgt. James Hurley, whose home in
Hartford, Mich., was foreclosed upon by Saxon in 2005 while he was in Iraq. Hurley settled with Saxon earlier this year for an undisclosed amount.

Foreclosure cases involving military personnel serving overseas began coming to light in 2005. Last month, New York-based JPMorgan Chase agreed to settle a class-action lawsuit for more than $60 million. The case involved a Marine Corps captain who said JPMorgan overcharged its military customers who took out mortgages with the bank.

Earlier this year, JPMorgan acknowledged that it had overcharged about 4,000 service members on mortgages and had wrongfully foreclosed on 14 of them. At the time, it paid $2 million to those affected and reversed the foreclosures.

Federal officials say they’re working to provide greater financial protections for military families. A federal office dedicated to military financial issues, the Office of Servicemember Affairs, was launched in January and is to be incorporated within the newly created Consumer Financial Protection Bureau.

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Comment balloon 10 commentsJohn Mayer • May 28 2011 11:23PM

Comments

John:

What a reprehensible thing to do to our service people, especially those serving in Iraq and Afghanistan.  Thye desreved to be sued and to lose.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) almost 8 years ago

Evelyn - I agree. Banks are out of control.

Posted by John Mayer, Your Beach Area Expert (Oikos Realty, Cape Canaveral, Cocoa Beach Florida) almost 8 years ago

John...

I had a an active military duty owner foreclosed on even though we has a short sale offer that was NEVER reviewed. Shameful.

Posted by Richard Weisser, Richard Weisser Retired Real Estate Professional (Richard Weisser Realty) almost 8 years ago

John,

I'm all for not letting BOA use America in their name. Disgusting behavior.

Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) almost 8 years ago

John, This is shocking news to me. The settlement will never give back what these people went through.

Posted by Keith Gilkey, 410-920-7214, Re/Max Chesapeake (Re/Max Chesapeake) almost 8 years ago

Richard - It happen's all too often and most times, we just let them get away with it.

Posted by John Mayer, Your Beach Area Expert (Oikos Realty, Cape Canaveral, Cocoa Beach Florida) almost 8 years ago

Rich - I agree. Let's call them the Bank of Greed and Gouging.

Posted by John Mayer, Your Beach Area Expert (Oikos Realty, Cape Canaveral, Cocoa Beach Florida) almost 8 years ago

Keith - That's the problem. If the bank would have done the right thing, they wouldn't have had to go through this.

Posted by John Mayer, Your Beach Area Expert (Oikos Realty, Cape Canaveral, Cocoa Beach Florida) almost 8 years ago

John, I'm currently helping someone in the military who has her house now listed as a short sale...it could easily have been a foreclosure, but Wells Fargo has been great to do business with...BOA on the other hand has been nothing but problems with other transactions...that's not to say they WF hasn't gotten complaints, but they are leaps and bounds better than BOA.

Posted by Nick T Pappas, Madison & Huntsville Alabama Real Estate Resource (Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Huntsville AL) almost 8 years ago

Nick - I guess the greed level is higher at BOA. Maybe the execs need another bonus :-(

Posted by John Mayer, Your Beach Area Expert (Oikos Realty, Cape Canaveral, Cocoa Beach Florida) almost 8 years ago

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