Bank of America to Pay $36.8M to Military Members in Foreclosure Settlement

Bank of America to Pay $36.8M to Military Members in Foreclosure SettlementSubsidiaries of Bank of America and Morgan Stanley have agreed to pay more than 300 military service members whose homes were unlawfully foreclosed more than $39 million in relief that covers violations of the Servicemembers Civil Relief Act, Justice Department officials said Friday.
The foreclosures took place between 2006 and 2010. The relief stems from the Justice Department’s 2011 settlements with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corp., and Saxon Mortgage Servicing Inc., a subsidiary of Morgan Stanley.
The bulk of the compensation — $36.8 million — will come from Bank of America, the nation’s second largest bank.
Each service member will receive a minimum of $116,785, plus compensation for any equity lost with interest, officials said. Bank of America already has begun compensating 142 service members.
The Servicemembers Civil Relief Act provides financial protections for military members as they enter active duty. It covers issues such as rental agreements, security deposits, prepaid rent, evictions, foreclosures, civil judicial proceedings, and income tax payments.
Borrowers receiving payment under this settlement may receive an additional payout under a separate agreement between Bank of America and federal banking regulators — the Office of the Comptroller of the Currency and the Federal Reserve — stemming from the scuttled Independent Foreclosure Review (IFR).
Up to 4.2 million borrowers are eligible for payouts starting this month in the IFR settlement, covering wrongful foreclosures in 2009 and 2010. IFR payment will bring the total amount received by eligible borrowers to $125,000, plus equity where applicable, Justice Department officials said.
Under the second settlement announced Friday, Saxon Mortgage Services Inc. is now paying out more than $2.5 million to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010. Each service member in this settlement will receive a minimum of $130,555, plus compensation for any equity lost with interest.
Bank of America is also one of five mortgage servicers that entered into a settlement the pre-dates the IFR, known as the National Mortgage Settlement, announced by the Justice Department in 2012 regarding wrongful foreclosure practices, including the infamous “robo-signing” of documentation without proper verification.
The Justice Department is overseeing ongoing audits of the five largest mortgage servicers in the country — Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally — to identify violations of the Servicemembers Civil Relief Act’s foreclosure provisions between Jan. 1, 2006, and April 4, 2012, and a 6 percent interest rate cap provision between Jan. 1, 2008, and April 4, 2012.

2 thoughts on “Bank of America to Pay $36.8M to Military Members in Foreclosure Settlement

  • April 7, 2013 at 11:29 am
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    WOW that is great news for them. I really hope it helps them fully get back on their feet. Enjoy it familys 🙂
    And to Bank of America, keep doing the right thing. Your image may not be great or even very good right now. But if you keep doing the right thing and continue to help those who need it you will stand out not for doing things that were harmful to people but for being a bank that overwhelmingly showed that they care.

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