Military service members are specially protected by federal law when being foreclosed upon by mortgage lenders, but lenders do not always comply with these specific regulations. Last week, the Justice Department settled a case with a subsidiary of Bank of America and Saxon Mortgage Services for violating the Servicemembers Civil Relief Act while processing foreclosures between 2006 and 2010.
According to a recent article on the case in The New York Times, the two lenders agreed to compensate victims of illegal foreclosure practices, to improve any damage to credit scores from the wrongful foreclosures, and to upgrade training practices to ensure that employees know how to comply with the Servicemembers Civil Relief Act.
According to the Times, the lenders did not obtain court orders to foreclose on some active-duty military service members like they were required to do under the federal law. The Bank of America case involves a subsidiary formerly known as Countrywide Home Loans Servicing and wrongful foreclosures on 160 service members. The Saxon Mortgage Services case involves 18 service members.
The reason why there is a Servicemembers Civil Relief Act is to help protect people's civil rights while they are serving the country in the military and protect against wrongful foreclosure. If a person is serving in the war in Iraq, that person can't immediately defend their home from foreclosure; they are far from home and sometimes injured or suffering from post-traumatic stress disorder while these foreclosure proceedings are happening.
Some military service members were wrongfully foreclosed upon before 2006 as well, but the Justice Department chose that date because that is when foreclosures in the U.S. began to spike as the economic downturn began.
Mortgage Companies Settle Suits on Military Foreclosures (The New York Times)
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