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Servicemembers to get $123 million for unlawful foreclosures

In this April 4, 2010 file photo, a forclosure sign tops the for sale sign outside a home in Denver. On Monday, the Department of Justice found that six major lenders were guilty of illegal foreclosures on more than 1,000 servicemembers from 2006 to 2012.

DAVID ZALUBOWSKI/AP, FILE

By WYATT OLSON | STARS AND STRIPES Published: February 11, 2015

About 1,000 servicemembers are eligible to receive more than $123 million from five mortgage service companies as compensation for unlawful home foreclosures, the Justice Department announced Monday.

The companies found to have violated the Servicemembers Civil Relief Act were JP Morgan Chase Bank, Wells Fargo Bank, Citibank, GMAC Mortgage and BAC Home Loans Servicing, formerly known as Countrywide Home Loans Servicing.

Under this round of payments from the settlements, 666 service members and their co-borrowers will receive over $88 million from JP Morgan Chase, Wells Fargo, Citibank and GMAC Mortgage.

The other 286 servicemembers and their co-borrowers received more than $35 million from Bank of America in an earlier settlement.

The unlawful foreclosures occurred from 2006 to 2012.

Under the settlement, for mortgages serviced by Wells Fargo, Citibank and GMAC Mortgage, each affected servicemember will receive $125,000, plus any lost equity in the property and interest on that equity, the announcement said. Eligible co-borrowers will also be compensated for lost equity.

“These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes,” Acting Associate Attorney General Stuart F. Delery said in the Justice Department announcement.

“While this compensation will provide a measure of relief, the fact is that service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country.”

Vanita Gupta, acting assistant attorney general of the department’s Civil Rights Division, said in the announcement that officials expect “the compensation of additional service members who were subjected to unlawful judicial foreclosures or excess interest charges.”

Gupta said the companies had been “working cooperatively” with the Justice Department.

Some states allow banks to foreclose on overdue home mortgages without going through court hearings, a process known as non-judicial foreclosure. The Servicemembers Civil Relief Act prohibits such foreclosures against active military members and veterans during a set post-service period, as long as the mortgages were taken out before their military service began.

The act protects servicemembers from foreclosure even in states that allow non-judicial proceedings.

The new settlement also provides compensation for servicemembers whose mortgage servicer failed to file a proper court affidavit stating whether the borrower was in the military and for servicemembers who were denied the benefit of the Civil Relief Act’s interest rate cap of 6 percent.

Servicemembers who are entitled to compensation for these violations will be identified later this year, the announcement said.

Servicemembers or their dependents are advised to contact the Armed Forces Legal Assistance office if they think their Civil Relief Act rights have been violated.

The nearest location of an assistance office can be found at legalassistance.law.af.mil. Further information about laws protecting the rights of servicemembers is at www.servicemembers.gov.

olson.wyatt@stripes.com
Twitter: @WyattWOlson

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