By John H. Cushman Jr.
Members of the military services who lost their homes in unfair foreclosures have won a big victory â€“ and will receive big payouts â€” in the comprehensive settlement of mortgage litigation that was reached last week.
Four big lenders have agreed to identify service members who lost their homes or were denied interest rate reductions in violation of a law that protects active duty and deploying troops from credit card or mortgage abuses â€“ and to make up their losses. The lenders are JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, formerly GMAC.
The breakthrough was described in a briefing on Friday by Holly Petraeus, assistant director for the Consumer Financial Protection Bureau's Office of Servicemember Affairs; Tom Perez, assistant attorney general for the Justice Department's civil rights division; and Attorney General Beau Biden of Delaware.
Wells Fargo, Citigroup and Ally will be required to provide any service member who was a victim of a wrongful foreclosure a minimum of $116,785, plus lost equity and interest, Mr. Perez said. Banking regulators could decide to make the payout even higher.
JPMorgan Chase, which has compensated some service members because of an earlier private settlement, will provide victims either their home free and clear of debt or the cash equivalent of the full value at the time of the sale. "In addition," Mr. Perez said, "service members will receive compensation for any additional harm suffered."