Payments to military may rise

So far, several hundred military members who lost homes to illegal foreclosure actions by big banks and mortgage servicers have received settlements of $116,785 apiece for economic loss and emotional distress. They also have been paid any equity lost plus interest. The number of hefty payments to military members and recently-separated veterans likely will swell to several thousand, predicts Thomas E. Perez, assistant attorney general for civil rights in the Department of Justice.

Since last May, Perez and his division of attorneys have reached eight separate settlements involving groups of military borrowers and banks that violated protections in the Servicemembers' Civil Relief Act (SCRA).

The first two involved home foreclosures conducted without court orders by BAC Home Loans Servicing LP (formerly Countrywide Home Loans Servicing), a subsidiary of Bank of America, and by Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley.

Those settlements "were critically important because they were the template for all of the subsequent agreements we reached with other servicers," Perez said in a phone interview Wednesday.

Agreements to compensate more military victims of illegal foreclosures were finalized April 4 with JP Morgan, Wells Fargo, Citigroup and Ally Financial. The settlements are not seen as proof of intentional efforts by banks to prey on vulnerable military families, said Perez. Rather, they reflect "a chronic ignorance and inattention to legal obligations pertaining to service members" by the biggest players in the mortgage service industry.

That ignorance has ended thanks to enforcement actions by the DoJ in cooperation with attorneys general in 49 states and the District of Columbia.

"I am very proud of the work we did in all of these cases because I think we've really raised awareness and, frankly, we have been able to change the industry practice. Every (mortgage) servicer is now clearly on notice of their obligations under the SCRA," Perez said.

"To put a human face on this," he added, "we had a number of cases of service members who had been deployed overseas (and) injured in battle and, to add insult to injury, their homes were being illegally foreclosed on. When service members are protecting our nation, they need to know that we have their back, and that's really what these cases have been about."

Since collapse of the real estate market, which began by 2006, tens of thousands of military members lost homes to foreclosure. Only a fraction of these members, however, had their rights under the SCRA violated and thus have suffered illegal foreclosures to qualify for compensation. The most common illegal practice was to foreclosure on homeowners without a valid court order, which the SCRA requires for mortgage debt acquired before a service member came on active duty. This occurred most often in states like California that otherwise don't require servicers to go to court before foreclosing on homes.

Contact information for local offices is available online at:http://legalassistance.law.af.mil

Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: [email protected]