Two big banks will pay $22 million in monetary relief for illegally foreclosing on active-duty soldiers. Bank of America and Morgan Stanley foreclosed on 178 members of the military, in violation of the Servicemembers Civil Relief Act, according to the Department of Justice.
The biggest part of the settlement comes against BAC Home Loans, formerly known as Countrywide, which was purchased by Bank of America after the housing bubble burst in 2008. Countrywide foreclosed on about 160 soldiers between January 2006 and May 2009 without obtaining court orders, as required by law, because the company didn’t consistently check the military status of borrowers, according to the Justice Department.
“Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War,” André Birotte Jr., U.S. Attorney for California’s second district, said in the DOJ press release.
Bank of America will set aside $20 million to compensate the 160 servicemembers it wrongfully foreclosed upon. More money could go to additional soldiers who received the same treatment.
Morgan Stanley’s subsidiary, Saxon Mortgage Services Inc., will pay $2.35 million for illegally foreclosing on another 18 soldiers.
“With the numerous sacrifices our servicemembers make while they are serving our country, the last thing they need to worry about is whether or not their families will be forced from their homes,” says James T. Jacks, U.S. Attorney for the Northern District of Texas, where Saxon is based.
Both companies will be required to improve their training on foreclosure procedures concerning soldiers, and repair victims’ credit scores by removing any negative information wrongfully reported to the three national credit bureaus.
[Related article: Chase Broke Law in Soldiers’ Foreclosures]