In our last few posts, we have been discussing the historic $25 billion settlement agreement between the attorneys general of more than 40 states and the five major banks (Wells Fargo, JPMorgan Chase & Co., Bank of America, Ally Financial and Citigroup) concerning widespread abuses in the mortgage industry and fraudulent foreclosure practices.

Interestingly, there is another component of the settlement that is now generating a significant buzz across the country: relief for active duty and deploying armed forces personnel whose lenders violated federal laws prohibiting mortgage abuses among service members.

According to federal officials, those military members who lost their homes due to deceptive foreclosure tactics or who were otherwise denied interest rate reductions on their homes will be eligible for some measure of relief.

Specifically, Ally Financial, Citigroup and Wells Fargo are required under the terms of the settlement to provide every service member who was victimized by wrongful foreclosure with a minimum of $116,785, as well as interest and lost equity.

JPMorgan Chase has already provided some measure of financial compensation to many victimized service members under the terms of a private settlement. However, they will also be required to provide affected service members with the return of their homes (free and clear of debt) or their cash equivalent at the time of the sale, as well as additional compensation for “any additional harm suffered.”

Tom Perez, the assistant attorney general for the Justice Department’s civil rights division offered a concise explanation of the legal protections offered to military members under federal law at a recent press conference.

“The law postpones, suspends, terminates or reduces the amount of certain consumer debt obligations so that members of the armed forces can focus their full attention on their military responsibilities without adverse consequences for themselves or their families,” he said. “Among these protections is a prohibition on foreclosure of a service member’s property without first getting approval from the court, if the service member received the mortgage loan prior to entering military service. And if a foreclosure is filed in court, it requires the servicer to notify the court that a service member is on active duty.”

It is worth noting that the settlement dictates that this relief/protection will not only be provided to military members who took out their mortgages before joining the service, but also to those who took out their mortgages after joining.

Finally, the assembled officials at the press conference indicated that the government will identify and notify all eligible service members over the course of time, and that they do not have to apply for relief.

If you are facing foreclosure, you should strongly consider contacting an experienced bankruptcy attorney to learn more about your rights and your options under Chapter 13 bankruptcy.

This post is for informational purposes only and is not to be construed as legal advice.

Similar Posts:

Share