Wrongful Military Foreclosures are Uncovered!
The news has been saturated with the destructive practices of the nation’s largest banks and the devastating affects it had on the housing market, the economy, and the millions of homeowners across the country. The impact resulted in a new lifestyle and reality that people are frustrated and angry and their lives have been devastated. Just when you might think you have heard it all, another major bank upheaval hits the news when the Office of the Comptroller of the Currency (OCC) launched an investigation earlier this year into the possible wrongful foreclosures of up to 5,000 military members by 10 of the largest banks and the Justice Department vows to enforce the law.
Just days after the announcement that the nation’s top banks reached a settlement of $25 billion as an attempt to make good on their wrong-doings, word is out that the banks will also have to make good on their illegal practices that caused military families to be wrongfully foreclosed on.
On December 19, 2003, the President of the United States signed into law H.R. 100, the Servicemembers Civil Relief Act (SCRA). This law completely rewrote the Soldiers and Sailors Civil Relief Act of 1940, expanding many of the previous law’s civil protections. The revisions made in 2003 offered more benefits, expanded the protection of active servicemembers, and were in place to assist those serving in Iraq and Afghanistan.
In connection with the $25 billion foreclosure settlement announced February 9, 2012, Thomas Perez, the U.S. Assistant Attorney General, gave a speech a few days later stating the banks will also resolve the Servicemembers Civil Relief Act claims where violations of this law resulted in wrongful foreclosures on military families. While the banks state they share the Justice Department’s goal to ensure that any service member harmed because of the violations of the SCRA will receive full compensation, it is incomprehensible that our nation’s largest banks would blatantly disregard such a well-known and long-standing law. The bank’s business practices are a total disrespect of the law. If the violations go unaddressed and unpunished, whatever trust we have left in our government, will surely be lost. Is there truth in the Attorney General’s speech when he said ‘the new agreement will insure the service member families receive their rightful compensation’?
The magnitude of the wrong-doing is huge. The results of the Office of the Comptroller of the Currency’s (OCC) investigation into this issue resulted in the possible wrongful foreclosures of nearly 5,000 military members by ten of the nation’s largest banks.
Based on the estimates by the top lenders themselves, Bank of America estimates 2,400 possible wrongful foreclosures on military families. Wells Fargo reported 870, Citigroup 700, and OneWest at 575.
Perez announced these banks would conduct a review that will be overseen by the Justice Department to unveil all foreclosure violations of the SCRA law dating as far back as January 1, 2006. Some banks have already come forward and settlements have been determined.
JPMorgan Chase Bank settled with the Justice Department after it wrongfully evicted 14 military families. Chase agreed to give the families back their homes or the cash equivalent if the homes were already sold – clear of any debt – and a determined cash payout. Because of this investigation, Chase also took on a panel of military veterans last year to develop foreclosure prevention programs and other assistance programs to benefit service members.
Bank of America agreed to pay $20 million to the 157 military families they allegedly foreclosed on wrongfully between 2006 and 2009. They also agreed to conduct a more in-depth review to uncover any other missteps or violations that may have occurred between mid-2009 and 2010.
Wells Fargo, Citigroup and Ally Financial will pay a military family a minimum of $116,785, plus any lost equity in their home if it is determined they were wrongfully foreclosed upon. Additionally, they will reimburse the family for interest charged over 6% on a mortgage, as interest higher than 6% violates the SCRA law.
Active duty military members should know what all of their rights are under the SCRA. The SCRA provides a wide range of protections for individuals entering, called to active duty in the military, or deployed servicemembers. The intention of this law is to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. A few examples of some obligations servicemembers may be protected against include:
- Outstanding credit card debt
- Mortgage payments
- Pending trials
- Taxes
- Terminations of lease
The SCRA also protects service members against foreclosures of mortgages, as long as the following facts are established:
- The relief is sought on an obligation secured by a mortgage, trust deed; or other security in the nature of a mortgage on either real or personal property;
- The obligation originated prior to entry on active duty;
- The property was owned by the service member or family member prior to entry on active duty;
- The property is still owned by the service member or family member at the time relief is sought.
- The ability to meet the financial obligation is materially affected by the service member’s active duty obligation.
For a broader overview of the Servicemembers Civil Relief Act and its benefits go to:
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