We have been receiving an increase in calls and contacts from military servicemen and women whose homes were foreclosed on by banks while they were on active military duty. This practice is the lowest of the low. While these servicemen and women were putting their lives on the line for their Country, opportunistic banks seized their homes, threw out their possessions and sold off their homes at auction prices.
Foreclosing on an active duty member of the military without a court order is a violation of the federal law known as the Servicemember’s Civil Relief Act (SCRA). Banks even need a court order in states where “non-judicial” foreclosures are allowed.
We now know that many banks lied about the number of illegal military foreclosures when the issue first became news at the height of the foreclosure crisis. A document posted on the Federal Reserve’s website called “Independent Foreclosure Review Payment Agreement Details” indicates that the 11 biggest mortgage servicers foreclosed on 1,082 active duty military families and attempted to foreclose on another 116. The number of actual foreclosures is much higher than previously reported. It is evident that these big bank servicers lacked procedures for complying with the SCRA.
Many servicemen and woman are now being notified of their eligibility for payments from the national mortgage settlement. The settlement damage matrix indicates that military families are entitled to $125,000 from the settlement fund. Depending on your circumstances, a $125,000 payment may be fair. In many cases, particularly where possessions were removed from a home and thrown out, $125,000 may not even come close to the amount of money necessary to fairly compensate a military family.
The good news is that servicemen and women do not waive or release any legal claims they have against the banks and their servicers. They can accept the payment from the settlement and still pursue legal action against the bank and its servicer. In states that have long statutes of limitation, evaluating your legal claims is a good idea. For example, Massachusetts has a consumer protection statute with a four year statute of limitations that allows for double or triple damages for unfair and deceptive business acts and practices, with a violation of the SCRA creating a per se violation of the Massachusetts consumer protection statute. Other states may have similar laws, including punitive damages. The bottom is military families who receive a payment under the national mortgage settlement may be entitled to even more damages in court.
The real unanswered question is whether the banks and their servicers have changed their policies and practices when foreclosing on military families. Or will they continue with their “Shoot First, Ask Questions Later” culture which led directly to mortgage meltdown in the first place.
More more on Independent Foreclosure Review, go to http://www.federalreserve.gov/consumerinfo/independent-foreclosure-review-payment-agreement-faqs.htm