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Mortgage companies settle wrongful foreclosure suits

Dealing with mortgage problems and foreclosure proceedings can be very difficult. It can be even more so when mortgage lenders and servicers engage in wrongful practices. Such wrongful conduct can have major impacts on borrowers. In some cases, it can even lead to wrongful foreclosures.

Recently, a settlement was reached in connection to allegations of wrongful foreclosure. The matter involved two mortgage servicing companies. The two were accused of subjecting over 170 members of the military to wrongful foreclosures.

The foreclosures allegedly were wrongful because they ran afoul of the Servicemembers Civil Relief Act (SCRA). The SCRA provides a variety of special protections to military members. One of the provisions of the SCRA requires that a party obtain a court order before foreclosing on a property of an active-duty member of the military. Allegedly, the two companies failed to comply with this provision in the above-mentioned foreclosures.

The companies faced federal suits in connection to these allegations. The companies reportedly have settled these suits with the U.S. Department of Justice. As part of the settlements, the companies agreed to set aside money to compensate the service members who were subjected to the allegedly illegal foreclosures.

No consumer should have to be subjected to a wrongful foreclosure because a mortgage lender or servicer engaged in illegal practices. One would especially hope that the soldiers who bravely serve our country would not be exposed to such harm. Thus, one hopes that mortgage lenders and servicers take care to avoid wrongful conduct like that alleged in this case.

Source: The New York Times, "Mortgage Companies Settle Suits on Military Foreclosures," Diana B. Henriques, 26 May 2011

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