The Justice Department announced today that under its 2011 settlements with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, and Saxon Mortgage Servicing Inc., a subsidiary of Morgan Stanley, 316 service members whose homes were unlawfully foreclosed upon between 2006 and 2010 are due to receive over $39 million in monetary relief for alleged violations of the Servicemembers Civil Relief Act (SCRA).
Under the first settlement, Bank of America is required to pay over $36.8 million to service members whose homes were unlawfully foreclosed upon between 2006 and 2010. Each service member will receive a minimum of $116,785, plus compensation for any equity lost with interest. Bank of America has already begun compensating 142 service members whose homes were illegally foreclosed on between 2006 and the middle of 2009. Under the same agreement, Bank of America agreed to provide information about its foreclosures from mid-2009 through the end of 2010. As a result of that review, Bank of America will now pay 155 service members upon whose homes it illegally foreclosed. Borrowers receiving payment under this settlement may receive an additional payment under a settlement between Bank of America and federal banking regulators -- the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System -- if the foreclosure occurred in 2009 or 2010. Payments provided under the federal banking regulators’ settlement will bring the total amount received by eligible borrowers to $125,000 plus equity where applicable.
Under the second settlement, Saxon Mortgage Services Inc. is in the process of paying out over $2.5 million to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010. Each service member will receive a minimum of $130,555.56, plus compensation for any equity lost with interest.
Bank of America is one of five mortgage servicers that entered into a settlement, known as the National Mortgage Settlement, with the Justice Department in 2012 regarding its foreclosure practices. Pursuant to the National Mortgage Settlement, the Justice Department is overseeing ongoing audits of the five largest mortgage servicers in the country (Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally) to identify violations of the SCRA’s foreclosure provisions between Jan. 1, 2006 and April 4, 2012 and its 6 percent interest rate cap provision between Jan. 1, 2008 and April 4, 2012. The $36.8 million currently being paid by Bank of America to 297 service members is pursuant to the 2011 consent decree (which predated the National Mortgage Settlement), and represents only the non-judicial foreclosures conducted by Bank of America. As the National Mortgage Settlement audits progress, the Justice Department will be requiring payments by Bank of America for judicial foreclosure and interest rate violations, and by the other four servicers for judicial and non-judicial foreclosure and interest rate violations. Under the National Mortgage Settlement most service members wrongly foreclosed on will receive $125,000 plus any lost equity. For the foreclosure violations that took place in 2009 and 2010, the Justice Department is coordinating closely with the Office of the Comptroller and the Federal Reserve Board, which are conducting separate reviews of 12 mortgage servicers under the Independent Foreclosure Review process.
“Our men and women in the military should not have to worry about a bank foreclosing on their home while they bravely serve our country,” said Eric Halperin, Special Counsel for Fair Lending in the Civil Rights Division. “The Justice Department will vigorously enforce the laws that protect service members while they do their difficult and necessary work.”
The SCRA provides critical additional consumer and other protections to the men and women serving our nation in the military. For more information on the Justice Department’s work to enforce service members’ rights, please visit www.servicemembers.gov.