Veterans can now seek compensation for bad foreclosures
If you are, or were, in the military and were wrongly foreclosed on, you could stand to gain at least $116,785.
Four banks -- Ally, Bank of America, Citi and Wells Fargo -- have agreed to review the cases of every service member they’ve foreclosed on since 2006 under a deal struck with the federal government.
They’ll also check to make sure they followed the rules of the Servicemembers Civil Relief Act, which says banks must reduce to 6% the interest rate they charge anyone called to active duty.
If an active-duty service member asks the bank to reduce his or her mortgage rate to 6% and the bank refuses, it will have to pay the service member three to four times the amount it wrongly charged or a minimum of $500.
If it turns out the bank made a mistake in a foreclosure, the service member will get $116,785 plus a payment equal to the home equity he or she lost, with interest.
JPMorgan Chase will provide any service member who was a victim of a wrongful foreclosure either his or her home free and clear of debt or the cash equivalent of the full value of the home at the time of the sale.
Chase had already compensated service members charged interest in excess of 6% on their mortgages as part of an earlier settlement.
Bank of America has completed a similar settlement to resolve wrongful foreclosures in states where a lender doesn’t have to appear in court to foreclose. It will tackle the rest of the states as part of this agreement.
The banks also agreed to:
- Provide relief for some service members who had to sell their homes for less than they owed because of a permanent change in station.
- Pay $10 million into a Veterans Affairs fund that guarantees loans on favorable terms for veterans.
- Let the Department of Justice supervise their foreclosure case reviews.
In some cases, the service member’s case might also be reviewed by bank regulators. If those reviewers find a violation and order the bank to pay compensation to the former homeowner, the bank has to pay the higher of the two amounts.
The White House says a service member who took out a $200,000 mortgage with a 7% interest rate and was wrongfully denied a request to lower the interest rate to 6% over a course of 18 months would get $9,000 plus interest.
The short-sale provisions of the plan would help a service member who bought a home between July 1, 2006, and Dec. 31, 2008, and then had to sell it at a loss when his or her duty station was permanently changed.
If you think you might qualify for the foreclosure compensation, you can visit the Justice Department website or call (800) 896-7743.
If you think your Civil Relief Act rights were violated, you can contact the nearest Armed Forces Legal Assistance Office.