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Banks Pay Troops $123M for Illegal Foreclosures

(CN) - Nearly 1,000 service members will share in a $123.4 million settlement for illegal foreclosures carried out by five mortgage servicers, the U.S. Justice Department announced.

The payments stem from a $25 billion nationwide mortgage settlement reached between the lenders and federal government in February 2012.

Under terms announced Monday, 666 service members and their families will receive a total $88 million from JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc.

An additional 286 service members and their families have already received $34.5 million under a related, 2011 settlement with Bank of America.

"Service members should never have to worry about losing their home to an illegal foreclosure while they are serving their country," said Acting Associate Attorney General Stuart Delery in a written statement.

According to the Justice Department, the lenders violated the Servicemembers Civil Relief Act by carrying out non-judicial foreclosures against service members who are on or recently left active duty, and took out their mortgages before their service began.

All of the foreclosures that are the subject of the settlement took place between January 1, 2006 and April 4, 2012.

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