Mortgage settlement includes cash, help for troops
Published: February 16, 2012
WASHINGTON – The sweeping mortgage litigation settlement approved by federal regulators last week includes a host of assistance programs for servicemembers who may have been victims of shady lending practices, including hefty payouts for individuals who lost their homes.
The $26 billion settlement includes language stating that troops who were unfairly foreclosed on by Wells Fargo, Citigroup or Ally Financial will receive a minimum payout of $116,785 plus any home equity that would have accrued since the foreclosure. The deal echoes one previously struck with JPMorgan Chase, in which officials there agreed to pay back military foreclosure victims the value of their home, or return the property to those families.
At issue are violations of the Servicemembers Civil Relief Act, which prohibits foreclosures on active-duty troops’ homes without a court order. The rule was designed to protect servicemembers focused on their military duties from becoming homeless, but officials estimate that the rules may have been ignored in up to 5,000 cases over the last six years.
Department of Justice officials said the four lenders also agreed to conduct a review of their mortgages to see if any troops were charged interest rates over 6 percent even after requesting relief. The SCRA requires that cap, and any violations could result in troops receiving payouts of at least $500.
Troops affected by the settlement do not need to contact the mortgage lenders or Department of Justice to receive the payouts. Thomas Perez, Assistant Attorney General for the department’s civil rights division, said federal officials will review military and mortgage records to search for discrepancies in the numbers, and contact affected troops.
However, troops who believe they may be eligible can call 800-896-7743 for more information.
The settlement also includes an expansion of the Homeowners’ Assistance Program, developed by the Defense Department to help cover some of the loss when servicemembers are forced to sell their homes due to a military-mandated move.
Homeowners previously ineligible for the program may be eligible for expedited home sales and debt-reduction agreements. Justice department officials said such sales could still hurt a homeowner’s credit rating, but could provide some debt relief for those families.
More information is available at the Department of Justice’s web site.