[Correction: Bank of America has already paid approximately $35.37 million to 286 eligible service members as part of a separate settlement with the DOJ.]
The mortgage servicers that are subject to the National Mortgage Settlement are set to pay out $123 million in consumer relief to U.S. service members whose homes were illegally foreclosed on.
According to the U.S. Department of Justice, Bank of America (BAC), JPMorgan Chase (JPM), Citi (C), Wells Fargo (WFC) and GMAC Mortgage will send payments to 952 service members and their co-borrowers for conducting non-judicial foreclosures conducted in violation of the Servicemembers Civil Relief Act.
According to the DOJ, Citi will pay approximately $14.88 million to 126 service members, GMAC Mortgage will pay approximately $13.72 million to 113 service members, JPMorgan Chase will pay approximately $31.07 million to 188 service members and Wells Fargo will pay approximately $28.36 million to 239 service members.
Bank of America has already paid approximately $35.37 million to 286 eligible service members via an earlier settlement with the DOJ.
The non-judicial foreclosures in question took place Jan. 1, 2006, and Apr. 4, 2012.
“These unlawful non-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,” Delery continued. “The department will continue to actively protect our service members and their families from such unjust actions.”
Under the terms of the SCRA, non-judicial foreclosures are prohibited against service members who are in military service or within the applicable post-service period, as long as they originated their mortgages before their 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.
Under the terms of the NMS, for mortgages serviced by 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, the DOJ said.
The DOJ also said that 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.
Those claims will be reviewed by a special consultant, retired U.S. District Court Judge Edward Cahn.
“We are very pleased that the men and women of the armed forces who were subjected to unlawful non-judicial foreclosures while they were serving our country are now receiving compensation,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.
“We look forward, in the coming months, to facilitating the compensation of additional service members who were subjected to unlawful judicial foreclosures or excess interest charges,” Gupta continued. “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.”