November 14th, 2011 4:16 PM by Lehel S.
Military personnel whose homes were improperly foreclosed upon will each receive at least $116,875 from BAC Home Loans Servicing, a subsidiary of Bank of America, for the bank's alleged violation of the Servicemember Civil Relief Act.
Compensation will also be obtained by servicemembers for any equity lost from the bank's infringement of the law as part of this settlement, the Department of Justice said.
“The men and women serving our nation should not have to worry about a bank foreclosing on their home while they bravely serve our country,” said Thomas Perez, assistant attorney general for the civil rights division. “The Justice Department will vigorously enforce the laws that protect servicemembers while they do the difficult and necessary work of protecting our country. We have and will continue to work hard to ensure that servicemembers receive the full protections of the law and relief they deserve in a timely fashion.”
BAC Home Loans Servicing, formerly known as Countrywide Home Loans Servicing, illegally foreclosed the homes of approximately 160 servicemembers between January 2006 and May 2009. Six months ago, the Charlotte, S.C.-based bank agreed to a settlement with the Justice Department to pay a total of $20 million as compensation for the individuals who lost their properties.
This is the largest settlement ever reached by the Justice Department since the SCRA was enacted as a law in December 2003.
The SCRA provides additional consumer protection to the men and women who are serving in the military. That law forbids lenders from foreclosing on active-duty military members and caps their interest rate on all pre-existing consumer debt at 6%.
Servicemembers impacted by the bank's violation of the SCRA will begin to receive letters on Nov. 14 notifying them of their compensation under this settlement.
According to Terry Laughlin, chief risk officer at Bank of America, most of the foreclosures in this case occurred by Countrywide before the servicer was acquired by B of A in July 2008.
“It is our responsibility to make things right,” Laughlin told American Banker, a sister publication of National Mortgage News. “These errors are not acceptable, and we certainly regret them.”