Units of Bank of America and Morgan Stanley agreed to settle charges that they illegally foreclosed on U.S. service members. The Justice Department claimed that, in some cases, severely injured soldiers have had their houses seized.
Bank of America Corp. and Morgan Stanley units will pay $22.4 million to resolve U.S. allegations that they improperly foreclosed on active-duty soldiers, including some who suffered severe injuries, without first obtaining court orders.
The Bank of America unit will pay $20 million to settle a lawsuit alleging improper foreclosure on about 160 members of the military between 2006 and 2009, the Justice Department said in a statement today. Morgan Stanley's Saxon Mortgage Services Inc. unit will pay $2.35 million to resolve a lawsuit alleging it improperly foreclosed on 17 service members from 2006 to 2009.
“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” Thomas Perez, the assistant attorney general overseeing the Justice Department's civil rights division, said in today's statement.
The foreclosures violated the Servicemembers Civil Relief Act, which was enacted to shield deployed military personnel from financial stress, according to the Justice Department.
“These errors are not acceptable, and we certainly regret them,” Terry Laughlin, head of Bank of America's unit managing foreclosures and defaulted loans, said in an e-mail. “While most cases involve loans originated by Countrywide and the improper foreclosures were taken or started by Countrywide prior to our acquisition, it is our responsibility to make things right.”
Morgan Stanley apologizes to the military families affected by the mistakes, Mark Lake, a spokesman for the New York-based bank, said in an e-mailed statement.
“Our servicemen and women deserve the highest level of customer service,” Lake said. “Saxon has taken meaningful steps to ensure it has appropriate policies and procedures in place to comply fully with the Servicemembers Civil Relief Act.”
Last month, JPMorgan Chase & Co. agreed to pay $27 million in cash to about 6,000 active-duty military personnel who were overcharged on their mortgages, cut interest rates on soldiers' home loans and return homes that were wrongfully foreclosed upon, according to settlement terms filed in federal court in Beaufort, South Carolina.
JPMorgan Chief Executive Officer Jamie Dimon apologized this month for improperly foreclosing on U.S. military personnel.
“We deeply apologize to the military, the veterans, anyone who's ever served this country,” Dimon said during the New York-based bank's annual shareholder meeting.
In many instances, the lenders knew or should have known about the military status of the service members, according to the Justice Department. Victims included people who served in Iraq and Afghanistan.
Some of those in the military foreclosed on by Saxon were severely injured in the line of duty or suffer from post-traumatic stress disorder, according to the Justice Department.
--Bloomberg News--
