In the summer of 2005, U.S. Army Sgt. James Hurley — stationed in Iraq — found it difficult to reach his wife in Michigan. As first reported in the Huffington Post, for four days, Hurley received a message that the phone line was disconnected. Via his uncle, he finally tracked her down.
“She tells me, ‘We got kicked out of the house, we’re foreclosed,'” Hurley recalled. “I was so pissed off. If it wasn’t for my roommate and my sergeant who was over me, I think I would have gone nuts.”
It would be six months before he could get home to address the mess, and another year of court battles with Saxon Mortgage Services before any progress was made. Hurley — like all other active military personnel — is protected by the Servicemembers Civil Relief Act (SCRA), which dictates that administrative actions on deployed servicemembers’ housing, such as foreclosures and evictions, cannot happen without court consent.
For Hurley, it took four years to get a confidential settlement with Saxon and with co-defendant Deutsche Bank. Saxon maintains it did nothing wrong. However, for the more than 900 military officers and veterans, who, like Hurley, were victimized by the bank, the road to normalcy has been long and perilous.
Normalcy in lieu of justice
On Tuesday, Michigan Attorney General Bill Schuette and Director of the Michigan Veterans Affairs Agency Jeff Barnes announced the launch of the Michigan Veterans Homeowners Assistance Program (MiVHAP).
MiVHAP will allocate $5 million — obtained via settlement with the banks — as financial assistance to “Michigan military service members, veterans and their families who have struggled with the consequences of the mortgage foreclosure crisis.” The assets will be available on a first-come, first-served basis.
“Our veterans and their families make sacrifices to protect the freedoms we hold dear, and they should never be forced out of their homes illegally,” said Schuette in a statement. “Veterans have special protections from foreclosure under the law, but in many cases those protections were ignored by lenders, who pursued improper foreclosures. This new assistance is an important step toward restoring the lives of Great Lakes State veterans who may have struggled to keep their homes during the foreclosure crisis.”
“This is an important collaboration with the Attorney General,” said Barnes. “The complex challenges of deployment including the tempo of operation and the difficulty with establishing communications during normal business hours with lenders, makes it almost impossible for soldiers to remedy a pending foreclosure from the field.
“Further, the ramifications of foreclosure may result in the soldier losing their security clearance, creating a problem with their military job and can render them ineligible for re-deployment. Foreclosure for military service members continues to create additional problems for years by creating barriers to civilian employment and future home ownership.”
MiVHAP will offer assistance to active members of the military, members of the Army Reserves, Army and Air National Guardsmen and honorably discharged veterans who have lived or are living in a Michigan-based home that was targeted unfairly by the banks and experienced economic hardship as a result. In addition to the 900 veterans who were foreclosed upon, it is known that several banks overcharged veterans during the crisis, including at least 6,000 who were overcharged by JPMorgan Chase.
“The mortgage crisis affected many veterans and servicemembers and lasted so long that many lost or are losing their homes to foreclosure,” said Anne Dutcher, director of the Michigan Veterans Trust Fund, which administers MiVHAP. “This program is broadly designed to reach as many veterans and military service members as possible, to help them save their homes and get back on track to secure home ownership.”
A long and bumpy road
Relief for military families targeted by undue foreclosures have been slow to arrive. Tuesday, Reps. Elijah Cummings (D- Md.), Mike Michaud (D-Maine), Adam Smith (D-Wash.), Susan Davis (D-Calif.), Mark Takano (D-Calif.) and John Tierney (D-Mass.) introduced H.R. 1842: The Military Family Home Protection Act, which strengthen foreclosure protections that already exists under SCRA for active military personnel.
“This legislation extends critical protections to our nation’s servicemembers, veterans with disabilities, and the surviving spouses of fallen heroes who have made the ultimate sacrifice to protect our nation,” Cummings said. “The bill ensures that the homes of servicemembers are protected when they are most vulnerable — when they are placing their lives at risk overseas or recovering from service-related injuries here at home.”
“This bill holds banks accountable and provides much-needed protections to those who’ve served our country,” Michaud said. “This is a win-win for all members of our military and so many veterans, surviving spouses and their families. It should receive strong bipartisan support because it’s good policy and because it’s the right thing to do.”
A similar bill was passed by the House in the last Congress 394 to 27. The bill passes the Senate Veterans Affairs Committee, but never reached the Senate floor.
Checks ranging from $300 to as much as $125,000 for servicemembers that were foreclosed upon started to go out in April. These checks — which came from the $3.6 billion settlement between the federal government and Aurora, Bank of America, JP Morgan Chase, Citibank, Goldman Sachs, HSBC, MetLife Bank, Morgan Stanley, PNC Mortgage, Sovereign Bank, SunTrust, U.S. Bank and Wells Fargo — took two years to be delivered to the victims of this scandal, in part due to the extreme cost and complexity involved in having independent consultants conduct the foreclosure reviews for all of the borrowers that might have been impacted by the robo-signing scandal, in which the banks signed off on foreclosure affidavits without verifying the accuracy of the documents.
A revised settlement, which required the banks to make the needed reviews themselves and called for an additional $5.2 billion in borrower assistance — including loan modifications and forgiveness of deficiency judgments — allowed the stalled process to move forward.
Michigan’s settlement — where MiVHAP finds its funding — came from a separate $26 billion settlement between the attorney generals of 49 states and the District of Columbia, with Bank of America, Citibank, JPMorgan Chase, Wells Fargo and Ally Financial. At least $17 billion of the settlement went to modifying delinquent mortgages, with another $3 billion being used to refinance current mortgages. $5 billion went to state fines.
A return to shenanigans
Despite all of this, however, there are indications that the major banks are still targeting veterans. In Atlanta, a local attorney said as much, according to a Tuesday report from Channel 2 Action News. John Smith, an Army veteran, told Channel 2 that JP Morgan Chase drove his mortgage into default after an application for a loan modification.
“I was not in foreclosure. I wasn’t behind in my mortgage,” Smith said. “They were the ones who insisted I apply for a loan modification.” Smith alleged that JPMorgan Chase indicated that the modification would take 45 days, but instead took two years. During this time, representatives from JPMorgan Chase told Smith to not pay the loan until the modification goes through.
“And one day, all of a sudden, I started getting papers in the mail that it was $1,600 for three months, and then $20,000 for the next,” Smith said. Smith’s case is similar to another case of mortgage fraud Citi Mortgage is involved in with Richard Leder, an Air Force veteran. “I was told to go delinquent by Citi Mortgage over the phone,” Leder said. “They didn’t put it in writing.”
Leder, expecting that he would need to pay his mortgage eventually, deposited his monthly mortgage payments. When the bank foreclosed five months later, Leder immediately offered to bring his house current, but was declined by Citi.
Robert Thompson, the attorney that contributed to Channel 2’s story, believess that the banks are taking advantage of Veteran Administration (VA) mortgages, which are insured by the federal government. Thompson feels that the banks are selling the VA loans — which Smith and Leder have — to another mortgage servicer, but collecting the insurance money from the default.
“So they sold the loan, so they’re not owed any money. They will collect the money from reselling the house, and they’ll collect the insurance from the face value on the house to start with. So that’s doubling and tripling their money off the veterans and the government and the taxpayer,” Thompson said.
Since Smith first talked to Channel 2 in January, JPMorgan Chase has contacted Smith to settle the case. “They wanted to know what kind of compensation that we wanted for putting us through this stress and aggravation,” Smith said. An attorney for the Smith family has confirmed that JPMorgan Chase did file an insurance claim with the VA for the mortgage. The Smiths have promised to sue.