NEW YORK, April 4 (Reuters) - Members of the U.S. military whose homes were unlawfully foreclosed upon between 2006 and 2010 will receive about $39 million from subsidiaries of Bank of America and Morgan Stanley, the U.S. Justice Department announced on Thursday.
Each of 316 service members will receive at least $116,785, plus compensation and with interest, for any home equity lost.
The payout follows the 2011 settlements the Justice Department reached with BAC Home Loans Servicing LP, a subsidiary of Bank of America, and Saxon Mortgage Servicing Inc, a subsidiary of Morgan Stanley, for alleged violations of the Servicemembers Civil Relief Act.
The Act allows members of the military to postpone or suspend certain financial obligations, such as outstanding credit card debt and mortgage payments.
“Our men and women in the military should not have to worry about a bank foreclosing on their home while they bravely serve our country,” Eric Halperin, Special Counsel for Fair Lending in the Civil Rights Division, said in a statement.
Under the first settlement, Bank of America will pay over $36.8 million to service members whose homes were unlawfully foreclosed upon between 2006 and 2010, the government said. The bank has already begun compensating 142 service members whose homes were illegally foreclosed on between 2006 and the middle of 2009.
The bank had previously agreed to provide information about its foreclosures from mid-2009 through 2010. As a result of that review, Bank of America will now pay 155 additional service members upon whose homes it illegally foreclosed in that period, the Justice Department said.
Under the second settlement, Saxon Mortgage Services Inc is in the process of paying out some $2.5 million to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010.
The Justice Department is overseeing audits of the country’s five largest mortgage servicers - Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally - to identify violations of the Servicemembers’ act foreclosure provisions between Jan. 1, 2006 and April 4, 2012.