Some 666 service members victimized by banks that allegedly foreclosed on their homes illegally in violation of the Servicemembers' Civil Relief Act will receive a combined $88 million from four mortgage servicers, the Justice Department said.
The four banks are JPMorgan Chase, Wells Fargo, Citi and GMAC Mortgage.
Affected service members each will receive $125,000, plus any lost equity in their property and interest on that equity, Justice officials said. Eligible co-borrowers also will be compensated for their share of any lost equity in the property. Information was not immediately available about when payments will commence.
It's also just the first round; subsequent payments will be made to other service members whose rights may have been violated under separate provisions of the SCRA. Those troops will be identified later this year, Justice officials said.
The 666 foreclosures took place between Jan. 1, 2006, and April 4, 2012. The SCRA prohibits nonjudicial foreclosures against service members on active duty or mobilized as a Guard or reserve member — as long as the service member originated the mortgage before entering active duty or activation.
Some states allow lenders to foreclose on property without getting a court order. But the federal SCRA trumps those state laws and prohibits foreclosures without court orders. That court process protects service members, for example, by allowing them to request a delay in the proceedings.
These newly ordered payments are part of the settlements with some of the nation's largest lenders under the 2012 National Mortgage Settlement. Another 286 service members already have received more than $35 million from Bank of America through a 2011 settlement related to SCRA violations, Justice officials said.
All five mortgage servicers "have been working cooperatively with the Justice Department to compensate the service members whose rights were violated," said Acting Assistant Attorney General Vanita Gupta.
Acting Associate Attorney General Stuart Delery noted that these unlawful foreclosures forced hundreds of service members and their families out of their homes.
"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," Delery said. "The department will continue to actively protect our service members and their families from such unjust actions."
Justice officials have determined that 126 service members are eligible for a combined $14.9 million in compensation from Citi; 113 are eligible for a combined $13.7 million from GMAC Mortgage; 188 are eligible for a combined $31 million from JPMorgan Chase; and 239 are eligible for a combined $28.4 million from Wells Fargo.
The service members who will receive money later under other violations of the SCRA fall into two categories:
- Those foreclosed upon after a court order where the mortgage servicer failed to file a proper affidavit stating whether the service member was in the military.
- Those who gave proper notice to their servicer but were denied the full benefit of the SCRA's 6 percent interest rate cap on pre-service mortgages.
As part of the National Mortgage Settlement announced in 2012 related to nationwide mortgage fraud, the banks were required to help certain eligible troops if they were forced to move on reassignment orders orders and couldn't afford to sell their homes because they owed more on the mortgage than the homes were worth.
Among other things, the property must have been purchased between July 1, 2006, and Dec. 31, 2008.
Those with questions about the SCRA payments under the National Mortgage Settlement should contact their lender's representative:
Bank of America: Contact Rust Consulting Inc., the settlement administrator, toll free at 855-793-1370 or write to BAC Home Loans Servicing Settlement Administrator, c/o Rust Consulting Inc., P.O. Box 1948, Faribault, MN 55021-6091.
Citi: Call toll-free 888-326-1166.
GMAC Mortgage: Call Rust Consulting Inc., the settlement administrator, toll free at 1-866-708-0915 or write to P.O. Box 3061, Faribault, MN 55021-2661.
JPMorgan Chase: Call Chase toll-free at 877-469-0110 or write to P.O. Box 183224, OH-7160/DOJ, Columbus, OH 43219-6009.
Wells Fargo: Call the Wells Fargo Home Mortgage Military Customer Service Center toll-free at 877-839-2359.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book "A Battle Plan for Supporting Military Families." She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.