MANHATTAN (CN) – A federal class action accuses CitiMortgage of illegally foreclosing on the homes of “thousands” of military men and women on active duty, in violation of the Servicemembers Civil Relief Act. The lead plaintiff, an Army sergeant, says CitiMortgage filed a false affidavit stating that he “was not on active duty,” though he was, and was “on lock down,” and had no way to communicate with the outside world.
“This was not an isolated incident,” Sgt. Jorge Rodriguez says. “From Dec. 19, 2003 to date (the ‘Class Period’) CitiMortgage initiated thousands of foreclosure proceedings across the United States without adequate safeguards to ensure that servicemembers on active duty were not targeted by CitiMortgage’s foreclosures.”
Rodriguez bought a house in Del Valle, Texas in 2003, before he entered military service. CitiMortgage, which took over his loan from another mortgage company, foreclosed on and sold his home in 2006, when “Sergeant Rodriguez was engaged in a period of military service in the Texas Army National Guard or was otherwise entitled to the protections of the Servicemembers Civil Relief Act,” he says in his complaint.
“Sergeant Rodriguez was ordered to active duty in support of Operation Iraqi Freedom on January 6, 2006,” the complaint states. “His period of active military service began February 1, 2006. On February 4, 2006, he was ordered to Fort Hood for mission training in dessert and urban warfare tactics, including how to respond to I.E.D. attacks, how to handle enemy ambushes, and how to clear buildings of enemy combatants. During training, Sergeant Rodriguez could not leave the base and had no communication with the outside world. He describes the training environment as being ‘on lock down.’
“While Sergeant Rodriguez was on lock down training at Fort Hood, CitiMortgage initiated foreclosure proceedings against his property and sold it at a foreclosure sale on May 2, 2006. The foreclosure sale was not conducted pursuant to a court order and was not approved by a court. That same day, CitiMortgage’s lawyers filed an affidavit in the real property records of Travis County, Texas, stating that Sergeant Rodriguez was ‘not on active duty with any branch of the Armed Forces of the United States or w[as] not protected by the Servicemembers Civil Relief Act.’ Those statements were false.” (Brackets in complaint.)
Rodriguez completed his tour in Iraq in 2007, earning several distinctions for honorable service, then came home to find that CitiMortgage had foreclosed on and sold his house.
He adds that CitiMortgage sold the house for $13,000 more than he owed on it, but never paid him the difference.
He says he was unable to make his mortgage payments while on active duty.
“Serving in the Armed Forces of the United States often compromises the ability of servicemembers to fulfill their financial obligations and to assert their legal rights. Recognizing the hardships faced by servicemembers serving on active duty, Congress has long recognized the need for legislation to protect servicemembers,” the complaint states.
President George W. Bush signed the Servicemembers Civil Relief Act into law in December 2003. It expanded the Soldiers’ and Sailors’ Civil Relief Act of 1940.
“The purpose of the act is ‘to provide for, strengthen and expedite the national defense through protection extended by this act … to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the nation,'” the complaint states. (Ellipsis in complaint.)
“The SCRA accomplishes this goal by providing for the ‘temporary suspension of judicial and administrative proceedings and transactions that may adversely affect the civil rights of servicemembers during their military service.'”
The SCRA, which protects active members of the Army, Navy, Air Force, Marine Corps, Coast Guard and the National Guard, sets a 6 percent cap on pre-service loans and bans foreclosures against active service members’ properties without court approval, among other provisions.
“Specifically, lenders may not foreclose on a covered servicemember’s mortgage while he or she is on active duty, or within a specified grace period thereafter, without court approval. Any such prohibited foreclosure, sale or seizure of property is invalid under the SCRA,” the complaint states.
In July 2008, the grace period was extended to 9 months.
Rodriguez claims that “CitiMortgage foreclosed upon Sergeant Rodriguez’s property, and on the property of other class members, during their period of active military service or within the applicable grace period thereafter,” without a court order or written waiver.
He seeks class certification, compensatory and punitive damages for unlawful foreclosure of service members’ property and an order restoring possession of the properties foreclosed in violation of the SCRA.
His lead counsel is Scott Bursor with Bursor & Fisher.