A recent New York Times article reported that the nation’s largest banks wrongfully foreclosed on more than 700 homes owned by U.S. military during the housing crisis. Active military and National Guard members are protected from foreclosure under federal law, but some of the nation’s largest banks failed to take that into account when they wrongly seized the homes of hundreds of American service members.
The Servicemembers Civil Relief Act (SCRA) is a federal law requiring banks to obtain court orders before foreclosing on active-duty personnel. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo all foreclosed on military families without complying with SCRA.
The discovery was made while analyzing mortgages during the multi-billion dollar settlement with the government, according to the Times. Regulators have ordered the banks to pay $3.6 billion in cash and $5.7 billion worth of assistance to about 4.2 million homeowners victimized by the mortgage crisis.
As a part of sifting through the housing crisis mess, regulators required the largest loan servicers (JPMorgan, Wells Fargo, and Bank of America) to review certain loans. Each of the banks discovered about 200 military members whose homes were wrongfully foreclosed on in 2009 and 2010, according to the people with direct knowledge of the findings.
In January the banks were required to look through their foreclosures and identify the most harmed borrowers. They used a complex model that identified military members and homeowners who were current on their payments but still were foreclosed upon.
Regulators have the results of the detective work that the banks’ performed on themselves. These results will not be made public. According to the Times story, the people with direct knowledge cautioned that the numbers are not precise and could underestimate the extent of the problems.
As part of the settlement agreement, banks have provided sizable amounts to correct past wrongs. Financial compensation will help soothe the pain thousands and thousands of families felt as they went through the distresses caused by having their homes foreclosed. But this money won’t get families back into the homes they lost. Some banks have reached out in other ways to help the families of veterans and others that were wrongly foreclosed upon.
Have you or someone you know been improperly foreclosed upon within the last several years? If you think something inappropriate or unlawful occurred, you should contact your nearest Armed Forces Legal Assistance Program office to see if the SCRA applies. To have your SCRA case reviewed by the Department of Justice, you must first seek the assistance of your military legal assistance office. Here is the link: http://legalassistance.law.af.mil/content/locator.php.
“Violations of federal laws designed to protect our troops serving on active duty from foreclosures are unacceptable,” said Frederick R. Hill, a spokesman for Congressman Darrell Issa (R-California). “Those subjected to such illegal practices are entitled to appropriate compensation and the federal government has an obligation to prevent this from happening again,” Hill added.
Spokespersons for JPMorgan, Wells Fargo, and Citigroup all expressed regret for any hardship caused to members of the military, especially during times of service. Each of these companies has publicly reiterated an on-going commitment to meet their obligations to members of the military according to the requirements of the law.