Officials Announce $39M Settlement for Unlawful Foreclosures
From a Department of Justice News Release
WASHINGTON, April 5, 2013 More than 300 service members whose homes were unlawfully foreclosed upon between 2006 and 2010 are due to receive more than $39 million in relief for alleged violations of the Servicemembers Civil Relief Act, Justice Department officials announced today.
The relief stems from the Justice Department’s 2011 settlements with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corp., and Saxon Mortgage Servicing Inc., a subsidiary of Morgan Stanley, officials said.
Under the first settlement, Bank of America is required to pay more than $36.8 million to service members whose homes were foreclosed upon unlawfully between 2006 and 2010. Each service member will receive a minimum of $116,785, plus compensation for any equity lost with interest, officials said, and Bank of America already has begun compensating 142 service members whose homes were illegally foreclosed on between 2006 and the middle of 2009.
Under the same agreement, Bank of America agreed to provide information about its foreclosures from mid-2009 through the end of 2010. As a result of that review, Bank of America will now pay 155 service members whose homes it illegally foreclosed on.
Borrowers receiving payment under this settlement may receive an additional payment under a settlement between Bank of America and federal banking regulators -- the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System -- if the foreclosure occurred in 2009 or 2010. Payments provided under the federal banking regulators’ settlement will bring the total amount received by eligible borrowers to $125,000, plus equity where applicable.
Under the second settlement, Saxon Mortgage Services Inc. is in the process of paying out more than $2.5 million to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010. Each service member will receive a minimum of $130,555.56, plus compensation for any equity lost with interest.
Bank of America is one of five mortgage servicers that entered into a settlement, known as the National Mortgage Settlement, with the Justice Department in 2012 regarding its foreclosure practices. The Justice Department is overseeing ongoing audits of the five largest mortgage servicers in the country -- Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally -- to identify violations of the Servicemembers Civil Relief Act’s foreclosure provisions between Jan. 1, 2006, and April 4, 2012, and a 6 percent interest rate cap provision between Jan. 1, 2008, and April 4, 2012.
The $36.8 million being paid by Bank of America to 297 service members is pursuant to the 2011 consent decree -- which predated the National Mortgage Settlement -- and represents only the nonjudicial foreclosures conducted by Bank of America, Justice Department officials said. As the National Mortgage Settlement audits progress, they added, the Justice Department will require payments by Bank of America for judicial foreclosure and interest rate violations, and by the other four servicers for judicial and nonjudicial foreclosure and interest rate violations.
Under the National Mortgage Settlement, most service members wrongly foreclosed on will receive $125,000 plus any lost equity. For the foreclosure violations that took place in 2009 and 2010, the Justice Department is coordinating closely with the Office of the Comptroller and the Federal Reserve Board, which are conducting separate reviews of 12 mortgage servicers under the Independent Foreclosure Review process.
“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,” said Eric Halperin, special counsel for fair lending in the Justice Department’s civil rights division. “The Justice Department will vigorously enforce the laws that protect service members while they do their difficult and necessary work.”