Mortgage Companies to Pay $22 Million for Fraudulently Foreclosing on Troops
Two mortgage servicing companies that wrongfully foreclosed on the homes of at least 178 US military service members have agreed to pay at least $22 million in compensation to the troops they screwed out of their homes. According to the New York Times, the US Justice Department filed and settled lawsuits against a subsidiary of Bank of America formerly known as Countrywide Home Loans Servicing and Saxon Mortgage Services, a subsidiary of Morgan Stanley.
Those two companies “knowingly and repeatedly” violated the Servicemembers Civil Relief Act, a US law designed to protect troops financially and legally from just this sort of malicious fraud. Both companies ignored a provision that says they must obtain court orders before foreclosing on active-duty servicemen and women.
The former Bank of America subsidiary will pay $20 million to around 160 victims of illegal foreclosures that occurred in a three-year period from January 2006 to May 2009 and reimburse any other victims of illegal military foreclosures from May 2009 to the end of 2010. The company also vowed to improve its training and reporting of future violations to the Justice Department.
“It is our responsibility to make things right,” Bank of America executive vice president Terry Laughlin told the Times. Even though the majority of the fraudulent foreclosure activity at Countrywide took place before Bank of America acquired the company, Laughlin manned up and accepted BOA’s responsibility for this deplorable episode. “These errors are not acceptable, and we certainly regret them,” he told the Times.
As for Saxon Mortgage Services, that company illegally kicked 18 troops out of their homes, including some seriously wounded in combat and others suffering from post-traumatic stress disorder (PTSD). Saxon will pay $2.35 million to these victims who lost their homes during the same three-year period as in the Countrywide settlement.
“First and foremost, we want to apologize to those families that were affected by any mistakes made in the foreclosure process,” Morgan Stanley spokesman Mark Lake told the Times. “Our servicemen and women deserve the highest level of customer service.”
Both companies have also agreed to repair the damage to the credit scores of the affected service members.
Although they’ve both agreed to compensate victims to the tune of $22 million, neither company is actually admitting any wrongdoing.
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