We wrote last month on an issue that was quite timely because of Memorial Day. It was an issue involving very bad treatment of the military by mortgage companies. Two mortgage servicing companies have now agreed to settle federal complaints that they wrongfully foreclosed on the homes of at least 178 military service members and to set aside a minimum of $22 million to compensate those victims. The Justice Department had simultaneously filed and settled lawsuits against the two companies — a subsidiary of Bank of America formerly known as Countrywide Home Loans Servicing, and Saxon Mortgage Services, a subsidiary of Morgan Stanley. The companies were accused of knowingly and repeatedly violating the Servicemembers Civil Relief Act, the federal law that extends an array of financial and legal protections to military personnel. Specifically, the companies were accused of ignoring a provision of the law that required them to get court orders before foreclosing on active-duty service members.
The former Countrywide unit agreed to pay $20 million to approximately 160 victims of illegal foreclosures from January 2006 to May 2009. It also agreed to reimburse victims of any other illegal military foreclosures found to have occurred from May 2009 to the end of last year. Further, it promised to upgrade its training and report future violations of the Civil Relief Act to the Justice Department.
According to Thomas E. Perez, Assistant Attorney General for the Justice Department’s civil rights division, the Countrywide settlement is “easily the largest amount ever recovered“ by the Justice Department for violations of the Civil Relief Act. Saxon was accused of illegally foreclosing on approximately 18 service members, “some of whom were severely injured in the line of duty or suffer from post-traumatic stress disorder.“ Most of the improper foreclosures began before Bank of America acquired Countrywide.
Saxon agreed to pay $2.35 million to victims of the foreclosures, which occurred from January 2006 to May 2009. It also agreed to pay the victims of any subsequent wrongful military foreclosures, through the end of last year, and to upgrade its training programs. Both companies agreed to repair any damage their improper foreclosures had caused to the credit scores of the affected homeowners. There have been widely-publicized violations of the Civil Relief Act since well before January 2006, the starting date for these settlements. The Saxon investigation was based on a complaint by Sgt. James B. Hurley, an Iraq veteran who lost his home in western Michigan as a result of an improper foreclosure in 2005. Saxon and its co-Defendant in that case, Deutsche Bank, reached a confidential out-of-court settlement with the Hurley family early this year.
The 2006-9 period was chosen by the Justice Department because it encompassed the sharp increase in national foreclosure activity that began in late 2006. The terms of this settlement expand that window to the end of 2010. The two mortgage companies have set up a direct hot line [(800) 896-7743] for service personnel who believe they are eligible for relief under the settlements.
Any company that takes advantage of military families without any justification, and in clear violation of the law, should be punished severely and perhaps put out of business!
Source: New York Times
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