Active duty military are protected under a law called the Service Members Civil Relief Act, which provides them with a variety of consumer protections. Among other things, the law prohibits lenders from foreclosing on a military member's home without first obtaining a court order. The Justice Department accused the Bank of America unit, which formerly belonged to Countrywide Financial, of improperly foreclosing on the homes of 160 military personnel between January 2006 and May 2009, without so much as checking to see if they were active-duty.
Fort Worth, Texas-based Saxon Mortgage Services was also fined in the investigation, after investigators charged the lender of foreclosing on 17 active-duty members' homes without obtaining court orders. The BAC unit was ordered to pay $20 million, while Saxon has agreed to pay $2.35 million. The lenders have also agreed to compensate beyond those amounts any further military personnel who come forward in the future.
"I feel quite confident in the thoroughness of the investigation to date," said Assistant Attorney General Tom Perez after the settlement was made public. "However, if we identify other victims in the course of our review, or if the servicers identify other victims, we will of course compensate them." Perez explained that the victims of Saxon's wrongful actions will receive about $130,555, while BAC victims will be given $125,000.
JPMorgan Chase has admitted in recent months that it too had improperly foreclosed on at least 18 homes owned by active-duty military personnel, and it is believed that hundreds more soldiers wrongfully lost their homes to other lenders. Perez declined to comment on JPMorgan Chase's admission, but said that investigations into other mortgage servicers are pending.
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