Lawmakers Call for Military Foreclosure Investigation PDF Print E-mail
Tuesday, 12 July 2011 18:58

Senator Jay Rockefeller and representative Elijah Cummings called today for a formal investigation into the level and scope of illegal foreclosure proceedings brought against active US service members in recent years, setting the stage for a possible new chapter in the foreclosure saga.  This particular twist has its origins in poor understanding on the part of major lending institutions regarding a somewhat obscure federal law known as, the Servicemembers Civil Relief Act.  This law was/is intended to set boundaries and restrictions to how banks may proceed with a foreclosure when an active duty member of the US military is the subject, and was unfortunately unknown to many bank employees working those cases - if not outright ignored in other instances.

JP Morgan earlier this year admitted to its own guilt in having mistakenly foreclosed on the homes of at least 27 service members.  As a result, they have offered to forgive the debt of all effected parties, as well as to reimburse for the losses victims whose homes were sold out from under them due to the foreclosures.  Bank of America has logged an even larger number of mishaps: 160 wrongful foreclosures that in May led to a settlement with the Justice Department for $20 million.  Beyond these specific cases, however, the worry is that the issue may be much more widespread than present figures might indicate. Not only is it felt that the banks are unaware of the scope of the issue, particularly given the recent revelations concerning "robo-signing," but there is concern also that many effected service members themselves are completely unaware of the protections that were afforded to them under federal law.  After all, without being proactively informed or educated, why *would* a service member feel that they were in a position to contest the proceedings?

As someone that has worked with banks directly before within the short sale/foreclosure process, I certainly feel for those soldiers that were deployed overseas at the time that they were trying to grapple with the banks.  One could very realistically spend 40+ hours on the phone with various bank representatives across weeks & months, and progress only very slowly towards any sort of resolution.  If a solution is in fact ever reached.   Attempting this across time zones, and with very real time constraints on how long you are able to hold on the line for "someone that can help," it would seem to me nearly impossible.

It will be interesting to see if the investigation ultimately gets off the ground.  Having helped dozens of former and present US service members in their quest for home ownership in the DC area, and just given the size of the military population here in general, I have to wonder to what extent the Washington DC market has been effected by this.  My guess would be: probably not much.  But in more deployment-oriented areas such as Texas and California, I would think that the impact might be much more significant.

Last Updated on Saturday, 16 July 2011 18:36

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