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Military Foreclosure Victims May Receive $116,785

Are you in the military? Were you foreclosed on by Wells Fargo, JP Morgan Chase, Countrywide, Bank of America, CitiGroup or Ally since 2006? If so, you may be entitled to receive all your equity in the house you lost, plus interest, plus a check for $116,785. This is the result of a $25 billion settlement between these banks and 49 of the 50 state attorney’s general.

At issue was the state attorneys general’s allegation that these banks had been illegally foreclosing on many military members, in violation of the Servicemembers Civil Relief Act.

Under the law, any banks seeking to foreclose on any active duty service member was legally required to get a court approval, verifying that the service member’s ability to pay was not adversely affected by their military status when they entered into active duty. The law applies when a military service member obtains a loan as a civilian, but later enters active duty, on Title X orders, whether voluntarily or involuntarily.

The $116,785 represents the number agreed upon by the states and the affected banks to compensate service members for the hassle and emotional distress of the foreclosure.

However, JP Morgan and Bank of America fall under a separate agreement. Chase will be providing affected service members either with the home itself, free and clear of any debt, or a cash payment of the home’s value at the time of sale.

JPMorgan Chase also is conducting a review. In line with similar payments in an earlier settlement, Chase will provide the home free and clear of any debt, or the cash equivalent of the home’s full value at the time of sale.

Bank of America will provide a settlement along the same lines as Ally, City and Wells Fargo. This settlement will cover those who were wrongfully foreclosed on by Countrywide, whom Bank of America acquired in 2008.

The settlement also bars the accused financial institutions from foreclosing on or selling the home of any service member while deployed.

Finally, the Servicemembers Civil Relief Act requires lenders to reduce the interest rate on any outstanding loans to individuals entering active duty to 6 percent, or to show cause to a court why the borrower should be expected to repay as agreed. If you were wrongly denied a request to lower your rates to 6 percent, you may be entitled to a refund of any damages.

If you believe you may be among those entitled to the settlement, you should contact the Justice Department at Justice Department’s hotline at 800-896-7743.

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