Bank of America settlement Archives

Nearly 1,500 additional members of the military are eligible for more than $186 million in foreclosure reimbursements under the Servicemembers Civil Relief Act (SCRA), according to the Justice Department. In addition to other compensation, a total of 2,413 service members and their co-borrowers are eligible to receive more than $311 million.

The five mortgage servicers include:

JP Morgan Chase Bank N.A. (JP Morgan Chase);
Wells Fargo Bank N.A. and Wells Fargo & Co. (Wells Fargo);
Citi Residential Lending Inc., Citibank, NA and CitiMortgage Inc. (Citi);
GMAC Mortgage LLC, Ally Financial Inc. and Residential Capital LLC (GMAC Mortgage);
Bank of America N.A., Countrywide Home Loans Inc., Countrywide Financial Corp., Countrywide Home Loans Servicing L.P. and BAC Home Loans Servicing L.P. (Bank of America).

The compensation is a result of the 2012 settlement known as the National Mortgage Settlement (NMS) and an earlier settlement with Bank of America. It affects foreclosures that took place between January 1, 2006, and April 4, 2012, where the servicer obtained a foreclosure without a judicial proceeding or where the servicer obtained a default foreclosure judgment without filing a proper affidavit with the court stating that the service member was serving in the military.

For mortgages serviced by Bank of America, Wells Fargo, Citi, and GMAC Mortgage, members of the military who qualify will each receive $125,000, plus any lost equity in the property and interest on that equity. Eligible co-borrowers will also be compensated for their share of any lost equity in the property.

Members of the military and their dependents who believe that their SCRA rights have been violated should speak with an experienced foreclosure defense attorney immediately. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting service members is available at www.servicemembers.gov.

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Bank of America has agreed to a legal settlement with the Department of Justice to avoid prosecution for hundreds of billions of dollars in bad mortgage loans, making it the largest corporate legal settlement with the government in U.S. history. The total “on-paper” cost of the deal is reportedly as high as $17 billion. But many are calling the deal deceptive. In reality, the settlement is unlikely to cost BOA anywhere near that amount. Much of the deal will be tax deductible and half of its cost is made up of actions on behalf of homeowners that are in the bank’s best interest- not in the form of cash refunds that will cost the bank money.

So what does this settlement mean for struggling borrowers and underwater homeowners? While the details are still being worked out, the deal includes roughly $9 billion in cash payouts and $7 to $8 billion in “consumer relief” actions such as mortgage write-downs and refinancing for struggling borrowers. These consumer relief provisions do not require the bank to spend money they would not already spend in the normal course of business operations. For BOA, helping people stay in their homes and keep making payments is better for the bank’s revenue than foreclosing on struggling homeowners.

The settlement requires BOA to relax loan terms, reduce principal amounts and destroy abandoned properties that are hurting property values. Even at face value, the reported settlement is minuscule compared to the harm caused by Bank of America companies. The on-paper cost of the deal is less than 7 percent of the value of the mortgage deals Bank of America and its subsidiaries Countrywide and Merrill Lynch made before the housing crisis that have since gone bad.

Tag: Bank of America settlement

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