The issue of military personnel's homes that have been foreclosed on or put in short sale lists is getting the attention of the U.S. Justice Department. According to reports, several lenders and banks are under investigation for allegedly foreclosing on soldier's houses without court orders and for allegedly overcharging military employees.
Local reports revealed that a number of foreclosure homes in Southfield and in other areas of Michigan were owned by soldiers, some of whom were in active duty when their properties were foreclosed on. The investigation was reportedly revealed when a lawsuit was filed by a Grand Rapids Army Sergeant against his lender for foreclosing on his property in 2005 while he was in active duty in Iraq.
Officials have reported that several lenders are being investigated for possible violation of provisions under the Servicemembers Civil Relief Act in relation to a number of foreclosed homes for sale in Michigan owned by active-duty soldiers. The investigation though, is not limited to Michigan military personnel but also includes other states. The Servicemembers Civil Relief Act, established in 2003, was meant to temporarily suspend legal proceedings considered to have negative effects on soldiers' civil rights, particularly those who are in active duty.
Reports revealed that banks that foreclosed on soldiers' properties or put them in short sale lists while their owners are in military service are being asked to respond to subpoenas issued by certain regulatory agencies. The agencies are reportedly asking for information regarding the financing, origination, servicing, securitization and purchase of residential mortgages. The investigation is said to be mainly concerned with banks and lenders' due diligence on mortgage loans purchased for the purpose of securitization.
Meanwhile, a spokesperson for JPMorgan Chase has revealed that the bank will be returning money and properties to owners of foreclosed homes who were found to be overcharged or lost their properties while in active duty. The bank has reportedly started paying back around 4,500 military employees following a review of its law compliance practices. The amount will reportedly reach $2.4 million. Meanwhile, some soldiers' cases are allegedly being settled out of court, although details and terms of settlements were not released publicly.
The Justice Department investigation on cases of soldiers' properties in foreclosure and short sale lists is still ongoing. Reports showed that a number of banks are being scrutinized on whether they complied with the Servicemembers Civil Relief Act and whether they did overcharge some soldiers and foreclosed on their properties without court orders.
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