Banks to Pay Tossed-Out Military Families

(CN) - Bank of America and Saxon Mortgage will pay more than $22 million to resolve claims that lenders illegally foreclosed on around 180 military service members, the Justice Department said Thursday.

BAC Home Loans Servicing, a Bank of America subsidiary, will pay $20 million to resolve a lawsuit claiming that lenders foreclosed on 160 service members without court orders, authorities said. The complaint, filed in California's Central District, claimed that BAC failed to check on the military status of borrowers before foreclosing.

In a related settlement, Saxon Mortgage, a Morgan Stanley subsidiary, agreed to pay $2.35 million to resolve claims that it illegally foreclosed on about 17 service members between 2006 and 2009.

Both companies agreed to pay any service member wrongfully foreclosed on between 2009 and 2010.

The settlement, which resolves claims filed under the Servicemembers Civil Relief Act, requires both lenders to repair negative credit reports related to the allegedly wrongful foreclosures, and they must not pursue any remaining amounts owed under mortgages.

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