CHARLOTTE, N.C. - The U.S. Treasury Department is investigating whether Bank of America, Wells Fargo and eight other major banks may have illegally foreclosed on about 4,500 active-duty servicemen and women.
Charlotte-based Bank of America disputes the charges, but has agreed to work with an independent contractor and review more than 2,400 foreclosures on homeowners who indicated they were eligible for relief under the Servicemembers Civil Relief Act.
According to the Treasury's Office of the Comptroller of the Currency, Wells Fargo has also agreed to review 871 foreclosures of homeowners who indicated they were eligible under the act, which postpones or suspends certain civil obligations to allow active-duty servicemembers to devote their attention to their military duty.
Rep Brad Miller, D-N.C., of Raleigh, is calling it a "flagrant disregard for a law that has been on the books continuously since the First World War."
"If you're wearing the nation's uniform, if you're deployed in harm's way in service of your country, you should be able to focus your entire energy to our nation's service without worrying what's happening in a courthouse back home," Miller said.
The review is part of a larger examination by the comptroller's office on about 4 million borrowers who may have been improperly foreclosed upon in 2009 and 2010.
The nation's 14 largest mortgage servicers, including Citibank, Bank of America, JPMorgan Chase and Wells Fargo, agreed to review cases after the government found that some rushed the foreclosure process without proper review.
Bank of America officials said there is no basis for accusations that foreclosures on servicemembers were handled improperly. Spokesman Dan Frahm said that 2,131 of the alleged foreclosures on servicemembers were not completed, despite an independent consultant's findings.
"The data shared by the independent consultant simply confirms they are casting the widest net possible to ensure a large customer base is included in the review," he said.
Earlier this year, as part of a settlement with the Department of Justice, Bank of America agreed to pay $20 million to approximately 160 servicemembers who were illegally foreclosed on between 2006 and the middle of 2009. Each servicemember received at least $116,785 plus compensation for any lost equity, according to the DOJ.
Wells Fargo officials said Treasury's investigation doesn't indicate wrongdoing.
"These foreclosure actions will be reviewed by our independent consultant to determine if there was financial injury due to servicer error and, if so, the borrower may be eligible for compensation or other remediation," said Tom Goyda, a spokesman for Wells Fargo.
For servicemembers overseas, worrying about family members fighting a foreclosure is a dangerous distraction, said David Porter, a Raleigh-based financial planner who works exclusively with military clients.
Porter said he has represented three National Guardsmen who had to fight foreclosures while serving in Iraq and Afghanistan.
"In one case, his family was receiving threatening letters while he was in Iraq," Porter said. "The family was worried they were going to be on the street the next week."
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