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Two More Mortgage Companies Settle Charges of Wrongful Military Foreclosures

June 2, 2011

Our Moreno Valley foreclosure defense lawyers wrote last month about a settlement between the mortgage servicing arm of JP Morgan Chase and about 6,000 active-duty military personnel who were wrongly foreclosed or otherwise overcharged on mortgages in violation of federal law. That news was closely followed by a GAO report that found almost 50 wrongful foreclosures against active-duty soldiers, sailors, airmen and Marines. So we were disappointed but not surprised to see another report from late May saying units of Bank of America and Morgan Stanley have also been accused of wrongly foreclosing under the Servicemembers Civil Relief Act. Both lenders are paying millions to affected families to settle lawsuits by the Justice Department.

The New York Times reported that the Justice Department had sued and immediately settled with Saxon Mortgage Services, a subsidiary of Morgan Stanley, and a Bank of America unit that was once Countrywide Home Loans Servicing. Both were accused of knowingly violating the provision of the Act that requires them to get a court order before they may foreclose on active-duty military personnel. Bank of America agreed to pay $20 million to settle claims by at least 160 victims; Saxon agreed to pay $2.35 million to settle at least 18 claims. The settlements may be expanded if more victims are found, and the banks have also agreed to upgrade their training and repair damage to victims' credit reports. The Justice Department said the settlements were the largest ever recovered by the department under the Act, although the private Chase settlement was larger.

As Seal Beach foreclosure defense attorneys, we're pleased to see military families getting the protection they're legally entitled to. We see firsthand how difficult it is for people to fight foreclosure -- and that's when they're physically present and healthy. It's easy to imagine how much more difficult it would be to fight foreclosure for people who are home but injured, or overseas, with limited communications and jobs that require them to literally dodge bullets. However, it's disturbing that we've seen several of these cases, because they suggest that major lenders are widely ignoring the Servicemembers Civil Relief Act. If they are willing to ignore rules set up to protect active-duty military, one of the most well-protected and politically popular groups of homeowners, we wonder what other laws these lenders feel they don't have to follow.

Howard Law PC represents homeowners from all backgrounds, occupations and walks of life in negotiations for a loan modification or other alternative to foreclosure. We have worked in foreclosure defense since the beginning of the housing crisis, so we understand exactly what our clients are up against -- and we know the tricks loan servicers use to delay and deny modifications. (Partner Vincent Howard also served as an MP in the Army, so he has firsthand experience in with special challenges faced by military families.) Our Oceanside foreclosure defense lawyers frequently hear from clients who were denied loan modifications under the federal HAMP program, or denied a permanent modification after successfully completing a trial. Lenders may not deny these if you meet all of the qualifications set out by HAMP, and we will sue to enforce those rights or others if necessary.

If your home is in foreclosure or in danger of foreclosure and your loan servicer has refused to help, you should call Howard Law instead. We offer free, confidential case evaluations, so you can talk to us about your situation at no risk or obligation. To set up a meeting, call 1-800-872-5925 or send us an email today.