There is some good news in the foreclosure fraud front, fitting for Veterans Day. Those military families who were wrongfully foreclosed upon are going to get
relief, and recompense.
WASHINGTON—The Justice Department announced today that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).
Bank of America agreed to pay $20 million to approximately 160 servicemembers who were illegally foreclosed on between 2006 and the middle of 2009. Under the agreement, Bank of America agreed to provide information about its foreclosures from mid 2009-2010 and will pay damages in the same minimum amount to those servicemembers whose homes were illegally foreclosed upon to compensate for the loss of their homes. The review is on-going.
Excellent. Except, as David Dayen writes, this falls short of actual justice, and what about everybody else?
Let's recall that the penalty for wrongful foreclosures slated to be paid in the foreclosure fraud settlement being bandied about right now, according to reports, is around $1,500. It is not out of a lack of respect for the men and women of the military when I say that they are not worth 78 times more in compensation for these crimes than everyday men and women abused by mortgage servicers.
And these are crimes, though the DoJ won't follow through on that. The press release announcing the settlement very pointedly calls the incidents of wrongful foreclosures "the bank's alleged violation of the Servicemember Civil Relief Act (SCRA)." In the same sentence it says that homes were "unlawfully foreclosed on," but clearly this is yet another case where the bank won't have to admit wrongdoing, and can just pay their way out of the problem. As the Justice Department states clearly, violating the SCRA, particularly through an illegal foreclosure while the servicemember is in service, is considered a criminal misdemeanor "which is punishable by a sentence of up to one year imprisonment." (see page 7 of the linked pdf) Even this extraction of justice falls short.
The servicemembers caught up in this mess deserve that money, all $116,785 of it. And so do hardworking civilians who were duped into loans, ravaged by an Wall Street-caused economic meltdown and stonewalled or outright abused in their effort to save their homes.
Consider this. RealtyTrac announced yesterday that foreclosures were back on the rise, because "lenders corrected foreclosure paperwork and processing problems," according to its CEO. This is a falsehood. There is plenty of documented evidence showing that robo-signing is still happening. In the states where banks cannot get away with robo-signing, they have all but stopped foreclosing. The backlogs in these states will take several decades to clear. What this all means is that many thousands of American homeowners each month are subject to the same violation that befell these servicemembers—illegal foreclosures. The military members, by virtue of the clout of their institution and a banking industry looking to burnish their public image, are getting a handsome sum from the banks for their troubles. The rest of the borrowers can go jump in a lake.
This is fraud, fraud that could be punished by imprisonment. And all of those servicemembers who are receiving this settlement are absolutely entitled to it and it is a good thing. But it is not enough. It's not enough to keep banks from continuing with robo-signing and fraudulent foreclosures, and it's not enough to address the problem of all of the civilians who've been illegally kicked out of their homes.