These new revelations are the latest development in the “long and tangled effort to clean up the mortgage mess.”
In 2011, there was national outrage after reports surfaced indicating that “active military personnel and National Guard members were losing their homes while deployed in war zones.” The outcry prompted Congressional hearings, which led to the nations biggest banks being made to analyze all their mortgages and especially foreclosures. In a report released by the New York Times this weekend, it appears that the most recent findings “eclipse earlier estimates of improper evictions.” The most recent reports from Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo show that more than 700 military members were foreclosed on during the housing crisis, and that at least two dozen other borrowers, all of who were current on their mortgage payments, had their homes wrongfully seized. According to the Times,
The analysis, which was turned over to regulators in recent days, provides the first detailed glimpse into the extent of wrongful foreclosures amid the collapse of the housing market. While lenders previously acknowledged that they relied on faulty documents to push through foreclosures, the banks claimed borrowers were rarely evicted by mistake, including military personnel protected by federal law.
When regulators forced them to take a close look at their loans, JPMorgan, Wells Fargo and Bank of America, the largest loan servicers, each discovered about 200 military members whose homes were wrongfully foreclosed on in 2009 and 2010, according to the people with direct knowledge of the findings. Citigroup had at least 100 such foreclosures. The foreclosures violate the Servicemembers Civil Relief Act, a federal law requiring banks to obtain court orders before foreclosing on active-duty members.
Col. John S. Odom Sr., a retired Air Force lawyer who also represents active military personnel in cases of foreclosure said, “It’s absolutely devastating to be 7,000 miles from your home fighting for this country and get a message that your family is being evicted. We have been sounding the alarms that the banks are illegally evicting the very men and women who are out there fighting for this country. This is a devastating confirmation of that.” Although regulators have no plans to publicly release the information recently handed over to them, people with “direct knowledge” of the reports warn that these recent numbers are far from precise, and could very likely “underestimate the extent of the problems.”