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Bank of America Settlement for Wrongful Military Foreclosures

Bank of America Settlement for Wrongful Military Foreclosures

The day before Veteran’s Day, the Department of Justice announced that Bank of America will settle with servicemembers whose homes were unlawfully foreclosed upon.† Each claimant will receive a minimum of $116,785 plus compensation for any equity lost. This is supposed to compensate them for violations of the Servicemember Civil Relief Act (SCRA).

This payout works out to about $20 million total for 160 service members who were illegally foreclosed on between 2006 and the middle of 2009 by Countrywide. Bank of America inherited the responsibility for the wrongful foreclosures when they purchased Countrywide in 2008.

Bank of America has admitted no wrongdoing, but they purchased Countrywide, so are responsible for the debt restructuring.† Bank of America had an agreement with the states that accused Countrywide of misleading and predatory practices.† The Washington Post notes that Bank of America took these costs†into account when they bought Countrywide.

Violating the SCRA, particularly through an illegal foreclosure while the service member is serving, is considered ďa criminal misdemeanor and is punishable by a sentence of up to one year imprisonment.” (found on page 7 of the DOJ downloadable pdf on illegal foreclosures).† However, since Bank of America admitted no wrongdoing, charges have not been filed against them.

Several states have filed against Bank of America, though, and in a proposed settlement for restructuring the loans, first-year payments of principal, interest, taxes and insurance will be set to equal 34 percent of the borrower’s income, or 25 percent for those who are not in escrow.

Bank of America has guaranteed a permanently low principal on all loans.† Borrowers can also get an interest rate reduction in addition to that.

Guy Cecela, the publisher of Inside Mortgage Finance, told the Washington Post that this is a move that makes sense.† If the restructuring had not happened, and 20% of all mortgages defaulted (as they did in 2011), Bank of America will owe $22 billion dollars in losses.† They currently have set aside $150 million as part of the purchasing price of Countrywide.

Take away the $20 million for service members and we have $130 million for the rest of the country.† This is not nearly enough and leaves a deficit of about 20.7 billion. Doing the math, it leaves about $1,500 each for all non-service members who have been foreclosed one.

I am not sure this is enough, yet I do not begrudge the service members their part.

 

Related Stories:

Occupy Atlanta Encamps in Neighborhood To Save Police Officer’s Home From Foreclosure

Bank of America CEO to Activists: The Pressure is Working

Law Firm’s Halloween Party Mocks Foreclosure Victims

 

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55 comments

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9:04AM PST on Nov 26, 2011

I too, feel no pity for BofA. They owe those troops more than just this settlement. how about a personal apology to each and every troop they caused such misery for, while those troops were putting their lives on the line for the nation, the bank is slapping itself on the back for a job well done, and passing out bonuses. I do not, will not, ever bank with these greedy corporate banks ever again. I am a member of a Credit Union, I like doing business with them.

12:08AM PST on Nov 26, 2011

Thanks for the article.

10:36AM PST on Nov 24, 2011

I feel no piety toward the Bank of America.

5:25AM PST on Nov 24, 2011

The officers of the B of A who approved the foreclosures should also have to serve jail time.

9:27PM PST on Nov 23, 2011

Bank of America- here's the best vid on them to date
http://front.moveon.org/bank-of-america-pledges-to-sometimes-stop-doing-stuff-that-robs-customers-blind/

9:09PM PST on Nov 23, 2011

A deficit of about 20.7 billion? Sounds about equal to the bonuses that the dumbass CEO's have gotten!

8:53PM PST on Nov 23, 2011

Holy mackerel, Bank of America has to be at the top of everyone's list for _patriotism_, don't you think?

These banking industries have no moralsl.

7:54PM PST on Nov 23, 2011

I am so proud of the OWS protesters! Do you really think this would have happened if they hadn't come up with the idea of taking accounts out of this bank? I don't.
Now they are pulling a high-profile "see how nice we're being to our soldiers"; a well thought out sop to the masses. That's always heartwarming, yes? (I'm being sarcastic)
In the meantime, their tactics have not, and will not change, and what they've done to the rest of the depositors and the mess they've caused in lives all over the country has not abated. Why should they? They're not being held accountable.

7:39PM PST on Nov 23, 2011

thanks for telling the world

6:35PM PST on Nov 23, 2011

Freya, I travel a lot. In fact, tomorrow night will be my first night at home since May. I bank with a local bank and rely on my debit card which I usually have run as a credit card to prevent having fees assessed to my account. I works very well. I understand your point, but thought I would share a potentially workable solution.

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