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Press Release

Department of Justice Reaches Agreement to Compensate Servicemembers for Wrongful Foreclosures

For Immediate Release
Office of Public Affairs
Agreement Reached as Part of the $25 Billion Federal-State Mortgage Servicing Agreement

The settlement agreement with the nation’s five largest servicers announced today by Attorney General Eric Holder and the Department of Justice’s federal and state partners includes substantial financial compensation to homeowners who are servicemembers and establishes significant new protections for servicemembers in the future.  The financial compensation to servicemembers is in addition to the $25 billion settlement.

JPMorgan Chase & Co., Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly GMAC) have agreed to conduct a full review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemembers were foreclosed on in violation of the Servicemembers Civil Relief Act (SCRA) since Jan.1, 2006.   Wells Fargo, Citigroup and Ally will be required to provide any servicemember who was a victim of a wrongful foreclosure a minimum payment of $116,785 plus the servicemember’s lost equity and interest.   The servicemember’s payment could be higher as a result of the review conducted by the banking regulators.   To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any servicemember who was a victim of a wrongful foreclosure either his or her home free and clear of any debt or the cash equivalent of the full value of the home at the time of sale.   In addition, servicemebers will receive compensation for any additional harm suffered.   All compensation for servicemembers wrongfully foreclosed on is in addition to the $25 billion settlement amount.

In addition, Citigroup, Wells Fargo and Ally have also agreed to conduct a thorough review, overseen by the Department of Justice’s Civil Rights Division, to determine whether any servicemember, from January 1, 2008 to the present, was charged interest in excess of 6% on his or her mortgage, after a valid request to lower the interest rate, in violation of the SCRA.   Servicers will be required to provide any servicemember who was wrongfully charged interest in excess of 6% with a payment equal to a refund, with interest, of any amount charged in excess of 6% plus triple the amount refunded or $500, whichever is larger.   This compensation for servicemembers is in addition to the $25 billion settlement amount.   JP Morgan Chase had already compensated servicemembers charged interest in excess of 6% on their mortgage through the earlier private settlement.

“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 E. 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.”

All four servicers agreed to numerous other measures, including SCRA training for employees and agents and developing SCRA policies and procedures to ensure compliance with the SCRA. The servicers will also repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining amounts owed under the mortgages.

The joint federal-state agreement also includes expanded protections for servicemembers.    The SCRA prohibits foreclosures on servicemembers without court orders on mortgages that were originated before military service began. The settlement extends this protection to all servicemembers, regardless of when their mortgage was secured, if they were receiving Hostile Fire/Imminent Danger Pay and were stationed away from their home within nine months of the foreclosure.   The agreement requires all five servicers to provide certain servicemembers who are forced to move because of Permanent Change in Station (PCS) orders  access loan modifications without going into default or, in the event that they must sell their home at a loss, but are ineligible for funding from the Department of Defense’s Homeowners’ Assistance Program (HAP), with short sale agreements and mandatory deficiency waivers.   On the servicemember relief, the Department worked closely with the Delaware Attorney General’s Office, who led the servicemember negotiations on behalf of the state attorneys general.

In May 2011, the Department of Justice reached a more than $20 million settlement with Bank of America for wrongfully foreclosing on servicemembers without court orders.    That settlement only resolved allegations related to non-judicial foreclosures.    The Department did not release as part of today’s announced settlement any potential claims related to judicial foreclosures or possible 6% violations by Bank of America.

The JP Morgan Chase investigation was handled jointly by the Civil Rights Division and the United States Attorney’s Office in South Carolina.

President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.    The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.    The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.    For more information on the task force, visit .

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance office.    Please consult the military legal assistance office locator at and click on the Legal Services Locator.    Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at

Updated September 15, 2014

Press Release Number: 12-191