Many military homeowners in line for big payout
By Karen Jowers – Staff writer
Posted : Tuesday Mar 6, 2012 17:13:29 EST
The Justice Department estimates it will identify thousands of service members who have been wrongfully foreclosed on since 2006 — each of whom could be in line to receive tens of thousands of dollars, officials said Tuesday.
In conjunction with the $25 billion settlement reached by the federal government and 49 state attorneys general, four of the nation’s major mortgage lenders/servicers are conducting a review of the files of every service member foreclosed on since 2006, to determine if any of those foreclosures were in violation of the Servicemembers’ Civil Relief Act.
Although that review is ongoing, the primary violation was failure to obtain a court order before foreclosure, said Thomas Perez, assistant attorney general for the Justice Department’s Civil Rights Division. That provision of the SCRA applies to loans obtained before service members enter active duty.
Any service member wrongfully foreclosed on by Wells Fargo, Citigroup or Ally will receive $116,785, in addition to a refund of lost equity in their home, plus interest. The $116,785 represents the minimum calculation of the combination of economic loss and emotional distress, Perez said.
JPMorgan Chase also is conducting a review. In line with similar payments in an earlier settlement, Chase will provide the home free and clear of any debt, or the cash equivalent of the home’s full value at the time of sale. Bank of America was also involved in a previous settlement involving a service member’s foreclosure, and an ensuing review found 157 illegal foreclosures against service members, Perez said.
Service members who believe they may have been victims of wrongful foreclosure should contact the Justice Department’s hotline at 800-896-7743.
The settlement, first announced a month ago, also includes refunds for service members who lost money because they were denied lawful requests to reduce their interest rate to 6 percent.
Going forward, the agreement with these five banks prohibits them from selling or foreclosing on the homes of active-duty members serving in combat areas, expanding SCRA provisions that provide for a stay of a foreclosure or sale only to those who incurred a debt before entering active duty.
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