Five major lenders to pay $123M in foreclosure relief to service members

by MPA12 Feb 2015
Five of the nation’s largest mortgage servicers will pay more than $123 million to 952 service members and their co-borrowers for unlawful foreclosures that violated the Servicemembers Civil Relief Act (SCRA). 

The five mortgage servicers in the settlement with the U.S. Justice Department (DOJ) include JPMorgan Chase, Wells Fargo Bank, Citibank, GMAC Mortgage and Bank of America. 

In the first round of payments under the SCRA portion of the 2012 settlement known as the National Mortgage Settlement (NMS), 666 service members and their co-borrowers will receive over $88 million from JPMorgan Chase, Wells Fargo, Citi and GMAC Mortgage.  The other 286 service members and their co-borrowers already have received over $35 million from Bank of America through an earlier settlement. 

The unlawful foreclosures at issue took place between Jan. 1, 2006, and Apr. 4, 2012, according to the DOJ.

“These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes,” said Acting Associate Attorney General Stuart Delery.  “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.  The department will continue to actively protect our service members and their families from such unjust actions.”

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.

Click here to read the full report from the DOJ.



Is TILA-RESPA a good or bad thing long term?