WASHINGTON, D.C. – October 1, 2015 – (RealEstateRama) — The Justice Department announced today that an additional 1,461 service members and their co-borrowers are eligible to receive over $186 million for home foreclosures under the department’s settlements with five of the nation’s largest mortgage servicers.
Those settlements implement the protections of the Servicemembers Civil Relief Act (SCRA). Together with other foreclosure-related compensation announced by the department in February, a total of 2,413 service members and their co-borrowers are eligible to receive over $311 million. The five mortgage servicers are JP Morgan Chase Bank N.A. (JP Morgan Chase); Wells Fargo Bank N.A. and Wells Fargo & Co. (Wells Fargo); Citi Residential Lending Inc., Citibank, NA and CitiMortgage Inc. (Citi); GMAC Mortgage LLC, Ally Financial Inc. and Residential Capital LLC (GMAC Mortgage); and Bank of America N.A., Countrywide Home Loans Inc., Countrywide Financial Corp., Countrywide Home Loans Servicing L.P. and BAC Home Loans Servicing L.P. (Bank of America).
The compensation results from the SCRA portion of the 2012 settlement known as the National Mortgage Settlement (NMS) and an earlier settlement with Bank of America, for foreclosures that took place between Jan. 1, 2006, and Apr. 4, 2012, where the servicer obtained a foreclosure without a judicial proceeding or where the servicer obtained a default foreclosure judgment without filing a proper affidavit with the court stating that the service member was in military service.
“While this compensation will provide some financial relief to more than 2,400 service members and their families, the fact is no one serving our country in the Armed Forces should ever have to worry about losing their home to an illegal foreclosure,” said Acting Associate Attorney General Stuart F. Delery. “Through the Servicemembers and Veterans Initiative, the Department of Justice will continue to use every tool at our disposal to protect service members and their families from such unjust actions.”
“We are very pleased that the men and women of the armed forces who were subjected to unlawful foreclosure judgments while they were serving our country are now receiving compensation,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We look forward, in the coming months, to facilitating the compensation of additional service members who were subjected to excess interest charges on their mortgages. We appreciate that JP Morgan Chase, Wells Fargo, Citi, GMAC Mortgage and Bank of America have been working cooperatively with the Justice Department to compensate the service members whose rights were violated.”
Section 533 of the SCRA prohibits non-judicial foreclosures against service members who are in military service or within the applicable post-service period, as long as they originated their mortgages before their period of military service began. Even in states that normally allow mortgage foreclosures to proceed non-judicially, the SCRA prohibits servicers from doing so against protected service members during their military service and applicable post-military service coverage period. Section 521 of the SCRA prohibits mortgage servicers from obtaining default judgments against service members unless they file an affidavit with the court stating whether the defendant is in military service. If the affidavit shows that the person is in military service, the court must appoint an attorney to represent the service member and may delay or “stay” the foreclosure proceeding for a minimum of 90 days.
Under the NMS, for mortgages serviced by Bank of America, Wells Fargo, Citi and GMAC Mortgage, the identified service members will each receive $125,000, plus any lost equity in the property and interest on that equity. Eligible co-borrowers will also be compensated for their share of any lost equity in the property. To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any identified service member either the property free and clear of any debt or the cash equivalent of the full value of the home at the time of sale, and the opportunity to submit a claim for compensation for any additional harm suffered, which will be determined by a special consultant, retired U.S. District Court Judge Edward N. Cahn. Payment amounts have been reduced for those service members or co-borrowers who have previously received compensation directly from the servicer or through a prior settlement, such as the independent foreclosure review conducted by the Office of the Comptroller of the Currency and the Federal Reserve Board.
The NMS process for identifying service members eligible for foreclosure-related relief is now complete. The department expects that additional service members will be identified in the coming months based upon ongoing reviews of Bank of America’s non-judicial foreclosures pursuant to the earlier settlement.
The NMS also provides compensation for service members who gave proper notice to the servicer, but were denied the full benefit of the SCRA’s 6 percent interest rate cap on pre-service mortgages. The service members entitled to compensation under this provision will be identified in the upcoming months.
The following chart shows the number of service members who will be compensated by each of the servicers for both non-judicial and judicial foreclosures:
|Amount of Money to be Distributed||# of Servicemembers Eligible for Compensation||Amount of Money to be Distributed||# of Servicemembers Eligible for Compensation|
|Bank of America||$35,369,756||286||$63,686,567||490|
|JP Morgan Chase||$32,488,293||188||$27,424,558||204|
Today the parties filed a joint motion with the federal district court in Washington, D.C., to extend the term of the SCRA compensation provisions in the National Mortgage Settlement, which would allow additional time to reach all the service members entitled to foreclosure relief, as well as to complete the interest-rate reviews, which are ongoing.
Borrowers should use the following contact information for questions about SCRA payments under the National Mortgage Settlement:
- Bank of America borrowers should call Rust Consulting Inc., the settlement administrator, toll-free at 1-855-793-1370 or write to BAC Home Loans Servicing Settlement Administrator, c/o Rust Consulting Inc., P.O. Box 1948, Faribault, MN 55021-6091.
- Citi borrowers should call Citi toll-free at 1-888-326-1166.
- GMAC Mortgage borrowers should call Rust Consulting Inc., the settlement administrator, toll-free at 1-866-708-0915 or write to P.O. Box 3061, Faribault, Minnesota 55021-2661.
- JPMorgan Chase borrowers should call Chase toll-free at 1-877-469-0110 or write to P.O. Box 183224, OH-7160/DOJ, Columbus, Ohio 43219-6009.
- Wells Fargo borrowers should call the Wells Fargo Home Mortgage Military Customer Service Center toll free at 1-877-839-2359.
Service members and their dependents who believe that their SCRA rights have been violated should contact an Armed Forces Legal Assistance office. To find the closest office, consult the military legal assistance office locator athttp://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting service members is available atwww.servicemembers.gov.