Mortgage Banks to Compensate Military Homeowners for Illegal Foreclosures, Other SCRA Violations
After months of negotiation, the country’s five big mortgage banks agreed to compensate military homeowners for illegal foreclosures and other violations of the Servicemembers Civil Relief Act.
Wells Fargo, Ally Financial and Citigroup will pay nearly $117,000 plus interest and lost equity to active military members whose homes were illegally foreclosed upon since 2006. JP Morgan Chase and Bank of America agreed to settlement terms earlier this year for violations of the SCRA, which protects active military from foreclosure, interest rate hikes above a mandated cap and other civil and financial obligations.
Interest Rate Refunds
In addition, Wells, Ally and Citi pledged to hunt for internal violations of the interest rate provision, which limits increases to no more than 6 percent for credit obligations. Any military homeowners who paid interest at a rate above that threshold will be refunded with interest plus triple the amount of the refund, or $500, whichever tallies more.
These institutions also agreed to build training programs to educate employees about the Servicemembers Civil Relief Act and how it protects those who serve. The companies also vowed to repair any damage they caused to a homeowner’s credit score.
“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,” Thomas E. Perez, assistant attorney general for the Civil Rights Division, said in a news release. “We appreciate that Wells Fargo, JP Morgan Chase, Citigroup and Ally agreed, through this settlement, to compensate servicemembers whose rights were violated.”
New layers of financial protection are also set to emerge from the controversy. Service members will be insulated against foreclosure no matter when they obtained their mortgage provided they received Imminent Danger Pay or were stationed away from home within nine months of the foreclosure.
Any military member required to relocate due to a Permanent Change of Station will be afforded the opportunity to receive a loan modification or a short sale agreement with mandatory deficiency waivers.
Anyone who believes their SCRA rights were violated by these big banks can call the Justice Department at 1-800-896-7743. For other potential violations, contact your nearest Armed Forces Legal Assistance Office.