Mortgages

Wrongful Foreclosure Settlement for Military Members

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The U.S. Department of Justice and Attorney General Eric Holder recently reached a substantial settlement that will provide significant compensation for servicemembers who were wrongfully foreclosed upon by mortgage lenders.

Similar to the agreement reached between the nation’s five largest mortgage lenders and 49 states’ attorneys general, the agreement will grant financial compensation to servicemembers in addition to the $25 billion from the overall settlement, the Department of Justice announced. As part of the settlement, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial will all conduct reviews overseen by the Department of Justice’s Civil Rights Division to determine whether any servicemembers received foreclosure notices between January 1, 2006, and the time of the settlement that violated the Servicemembers Civil Relief Act. If so, the servicemember victimized by the wrongful filing will receive a minimum of $116,785 in compensation in addition to their lost equity and interest.

Citi, Wells Fargo and Ally will also conduct investigations, once against overseen by the Civil Rights Division, into whether any servicemembers were charged interest of more than 6 percent on their mortgage after filing a valid request for a lower rate, between January 1, 2008 and the present, the report said. If it is discovered that any were charged this rate, the servicemember must be refunded the amount charged in excess of 6 percent, with interest, as well as triple that amount or $500, whichever total is larger.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that we will protect their rights while they are serving our country,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division. “We appreciate that Wells Fargo, JP Morgan Chase, Citigroup and Ally agreed, through this settlement, to compensate servicemembers whose rights were violated.”

In May 2011, the Department of Justice reached a settlement with Bank of America for more than $20 million as a result of the lender wrongfully foreclosing on servicemembers without court orders, but that agreement only covered allegations related to non-judicial foreclosures, the report said. Details concerning judicial foreclosures and 6-percent violations similar to those being investigated by other lenders were not disclosed.

Banks foreclosed on millions of consumers nationwide during the recession as part of the massive robosigning scandal that saw unauthorized personnel sign off on filings without properly reviewing them.

Image: The U.S. Army, via Flickr.com

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