Members of the U.S. military sacrifice a lot for all of us and the overall safety of our country – our home. That reality makes the fact that many servicemembers have returned from duty to wrongfully foreclosed homes incredibly disappointing.
A couple of mortgage companies have agreed to try to fix their wrongdoings. They have agreed to pay a total of $22 million to at least 178 members of the U.S. military after the lenders were accused of wrongfully pursuing foreclosure proceedings on their residences.
A recent story by the New York Times reports that a subsidiary of Bank of America formerly known as Countrywide Home Loans Servicing and Saxon Mortgage Services, which is a subsidiary of Morgan Stanley, have agreed to settle the federal complaints.
The companies were accused of ignoring a portion of the Servicemembers Civil Relief Act. Specifically, the lenders violated regulations when they allegedly failed to obtain court orders before initiating foreclosure procedures on active-duty servicemembers.
The former Countrywide unit, which shut down because of the losses it faced in the nation’s mortgage-lending crisis, took the biggest hit in this case. It agreed to pay $20 million to about 160 victims.
This story is a reminder of the widespread mistrust that many consumers have of mortgage lenders. Many still blame mortgage lenders and banks for helping to cause the housing crisis that has so damaged the country’s economy. Critics say that these companies lent too much mortgage money to too many borrowers who couldn’t afford the homes. Naturally, a huge number of these mortgages eventually ended up in foreclosure.
The banks involved in this case, though, should at least be commended somewhat for doing the right thing in the end. Neither of them admitted to wrongdoing, but they have apologized and agreed to compensate the victims of illegal foreclosures. That, at least, is a step in the right direction of regaining the public’s trust.
For the soldiers who lost their homes, however, that loss will probably always sting.
The New York Times: “Mortgage Companies Settle Suits on Military Foreclosures,” Diana B. Henriques, 26 May 2011