We’ve been discussing the multibillion-dollar settlement between the country’s biggest banks and financial regulators a lot on this blog. The settlement will affect Florida borrowers who qualify under certain categories, including those who were erroneously foreclosed upon or who were unfairly denied loan modifications. As a part of the settlement agreement the banks have been reviewing records and filing new information about lending and foreclosures to regulators, and it recently became clear that one group that was significantly affected by bad bank practices were members of the military serving on active duty.
At least 700 members of the military were victims of a wrongful foreclosure at the hand of the nation’s largest and most powerful banks, according to the recent findings. Members of the military who are serving on active duty are protected from automatic foreclosure during the time that they are away and for a short period after they return by the Servicemembers Civil Relief Act. Under the law, banks must obtain a court order before foreclosing on someone who is away on active duty.
Several large banks have issued apologies following the disclosure of this information and have attempted to highlight the relatively small proportion of wrongful foreclosures compared with overall mortgages. Still, for servicemembers who have had to go through the stress and confusion of receiving an eviction notice while they’re overseas, the error was not small at all.
A spokesperson for Citigroup told reporters that they are working to prevent these wrongful convictions from continuing.
Any Florida borrower who has been through the foreclosure process knows that it can be stressful, but is often particularly difficult when the foreclosure is obviously a result of inaccurate records at the bank or files that are not updated frequently enough.
Source: DealBook, “Banks Find More Wrongful Foreclosures Among Military Members” Jessica Silver-Greenberg and Ben Protess, March 3, 2013
Information about the rights that borrowers having during a foreclosure process is available on our website.