By Debbie Gregory.
JP Morgan Chase, Wells Fargo, Citi, GMAC Mortgage and Bank of America will be paying out more than $311 million to over 2,400 servicemembers as compensation for wrongful foreclosures on those servicemembers’ homes.
The payments are a result of the Servicemembers’ Civil Relief Act portion of the 2012 settlement known as the National Mortgage Settlement.
Servicemembers will receive $125,000, plus any lost equity in their property and interest on that equity.
The violations occurred between January 2006, and April 2012.
Servicers were in violation due to the fact that they either foreclosed on homes without a judicial proceeding of servicemembers who originated their mortgages before their period of military service, or they obtained a default foreclosure judgment without filing a proper affidavit with the court stating whether the homeowner was in the military.
The settlement also provides compensation for troops who notified their mortgage servicers that they had entered active military service, but were denied the full benefit of the SCRA provision that caps interest rates on pre-service mortgages at 6 percent. Those servicemembers will be identified in the coming months, Justice officials said.
Borrowers should use the following contact information for questions about SCRA payments under the National Mortgage Settlement:
Payments made to servicemembers and co-borrowers for foreclosure violations will be reported to the IRS. But just because a payment is reported to the IRS does not mean that it is taxable. Your tax treatment will depend on your particular facts and circumstances. Payees should contact a professional tax advisor or other qualified financial counselor with any questions concerning taxes.
Officials expect more servicemembers who were victimized will be identified in the coming months. Servicemembers and family members who believe their SCRA rights have been violated may contact an Armed Forces Legal Assistance office.
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