U.S. military members who were victims of wrongful foreclosures will receive a substantial payout as part of the provisions in the $25 billion nationwide foreclosure settlement reached between states, the federal government and five major lenders last week.
Delaware Attorney General Beau Biden led negotiations that resulted in a payout of $116,785 for each service member who lost their home to illegal foreclosure since 2006 by lenders Wells Fargo, Citigroup or Ally Financial. The three banks also agreed to pay the soldiers any lost equity and interest.
JPMorgan Chase, which agreed to provide compensation in an earlier settlement, will provide victims with either his or her home free and clear of any debt or the cash equivalent of the full value of the home at the time of the sale.
The agreement requires each of the lenders to conduct a full review of their foreclosures to determine whether any service members were foreclosed on in violation of the Servicemembers Civil Relief Act.
“As a major in the Delaware Army National Guard and someone who’s served a tour of duty in Iraq, I have an up close and personal perspective on the issues that this settlement deals with head on,” Biden said.
The Servicemembers Civil Relief Act has virtually been in existence since the start of the Civil War, he said.
“The principal behind that statute was that when we send warriors to battle, they don’t have to worry about what’s happening at home,” Biden said. “Unfortunately that has not been the case for too many service members over the last decade.”
Tom Perez, assistant attorney general for the U.S. Justice Department’s civil rights division, said all compensation to military members is in addition to the $25 billion settlement.
“It was recognition that those who are making great sacrifices to protect us deserve to know we have their backs at home,” Perez said.
Perez noted additional protections put in place as a result of the settlement, including the prohibition of foreclosure on a service member’s property without approval from the court if the property was purchased received the mortgage loan prior to entering military service.
If a foreclosure is filed in court, the lender is required to notify the court if the service member is on active duty.
The banks have also agreed to repair any negative credit report entries related to the allegedly wrongful foreclosures and will not pursue any remaining funds owed under mortgages, Perez said.
“The men and women who serve our nation in the armed forces deserve, at the very least, to know that we will protect their rights while they are serving our country.”