The men and women who serve in our military are heroes — people who are willing to sacrifice everything for their fellow Americans. But too often during the foreclosure crisis, they weren’t treated with the respect and honor they deserved. Indeed, many unscrupulous lenders saw military personnel trying to stay in their homes not as families who needed help — but as targets for exploitation.
Some families lost their homes during the “robo-signing” scandal in which mortgage servicers didn’t bother reviewing or even reading the foreclosure documents they signed, giving people little chance to hold onto their homes. Many sought help on their mortgages but were victimized by dropped calls or lost or delayed paperwork. And others lost tens of thousands of dollars when they were forced to sell their homes at a loss because their country had asked them to relocate to a different duty station.
Additional servicemembers were charged excessive interest on their mortgages while they were still on active duty, even after they had made a valid request to lower it — a violation of federal law.
These actions were not only wrong — they’re not who we are as Americans. Men and women who put themselves in harm’s way should be able to focus on their jobs and their families — without having to worry about losing their homes.
That’s why the $25 billion settlement the Obama administration and 49 state attorneys general announced last month with the nation’s five largest mortgage servicers is so critical.
The settlement is a historic step forward in our ongoing work to help struggling homeowners and hold banks accountable — and it includes several key provisions that are specifically tailored to the needs of our men and women in uniform.
First, in a process overseen by the Justice Department, banks covered by this settlement must work to determine if any servicemembers were wrongfully foreclosed on — and if they were, families could receive benefits ranging from the payment of lost equity plus interest — with as much as $117,000 in additional bank penalties — to the return of their home, debt-free.
A similar review will be conducted to identify and provide full refunds to any military families that were wrongfully charged too much interest on their mortgages despite asking for help — and servicemembers can be compensated if they were forced to take a loss when selling their homes due to military relocation. But this settlement isn’t just about compensation for the harm families have already suffered. Thanks to the standards we’ve put in place, moving forward, servicemembers will be protected when they are asked to move to serve their country.
As military families know all too well, relocation to another base often means the painful decision to either sell your home at a loss or keep it while separated from your family. But with this settlement, these families will be able to sell their home without losing money — or get the modification they need to keep their home, even if it is rented out or empty.
Finally, to ensure that more veterans can achieve the dream of homeownership, the banks will pay $10 million into the Veterans Housing Benefit Program — which allows veterans to receive Department of Veterans Affairs-guaranteed loans on terms that make sense for them. Servicemembers wanting to make use of these provisions and protections can call 1-800-896-7743 or go to this site.
These critical steps are in addition to the $25 billion in compensation that the banks will be forced to pay — funds that will help millions of Americans reduce the principal balance on their loans or catch up on late mortgage payments by reducing their monthly bills.
With this settlement, the Obama administration has once again demonstrated its commitment to holding the banks accountable — and to ensuring that the men and women who are willing to sacrifice everything for the country they love are treated with the dignity and respect they have earned.
Shaun Donovan is the U.S. secretary of Housing and Urban Development.