(CN) - Members of the U.S. military whose homes were illegally foreclosed upon will receive $39 million from settlements reached with two mortgage lenders in 2011, the Justice Department said Thursday.
BAC Home Loans Servicing, a subsidiary of Bank of America Corp., and Saxon Mortgage Servicing, a subsidiary of Morgan Stanley, reached the settlements amid charges that they violated the Servicemembers Civil Relief Act (SCRA).
Prosecutors said they unlawfully foreclosed upon the homes of 316 service members between 2006 and 2010.
Under Bank of America's $36.8 million settlement, each service member will receive at least $116,785, plus compensation for any equity lost with interest. It represents only the nonjudicial foreclosures conducted by Bank of America, prosecutors said.
The Justice Department said Bank of America has already begun compensating 142 service members whose homes were illegally foreclosed on between 2006 and the middle of 2009.
Its review of foreclosures from mid-2009 through the end of 2010 also led the bank to announce that it will pay 155 service members upon whose homes it illegally foreclosed.
If the foreclosure occurred in 2009 or 2010, affected borrowers can also seek an additional payment under a settlement that Bank of America reached with the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System, according to the Justice Department's statement.
"Payments provided under the federal banking regulators' settlement will bring the total amount received by eligible borrowers to $125,000 plus equity where applicable," the statement continues.
Saxon Mortgage Services meanwhile reached a settlement of more than $2.5 million that will go to 19 service members whose homes were unlawfully foreclosed upon between 2006 and 2010.
The Justice Department said each service member will receive a minimum of $130,555.56, plus compensation for any equity lost with interest.
Both agreements are pursuant to a 2011 consent decree .
In 2012, the U.S. government reached a settlement known as the National Mortgage Settlement with five mortgage servicers regarding foreclosure practices.
"Pursuant to the National Mortgage Settlement, the Justice Department is overseeing ongoing audits of the five largest mortgage servicers in the country (Wells Fargo, Bank of America, Citibank, JP Morgan Chase and Ally) to identify violations of the SCRA's foreclosure provisions between Jan. 1, 2006 and April 4, 2012 and its 6 percent interest rate cap provision between Jan. 1, 2008 and April 4, 2012," the Justice Department said in a statement.
"As the National Mortgage Settlement audits progress, the Justice Department will be requiring payments by Bank of America for judicial foreclosure and interest rate violations, and by the other four servicers for judicial and non-judicial foreclosure and interest rate violations," it aadded. "Under the National Mortgage Settlement most service members wrongly foreclosed on will receive $125,000 plus any lost equity. For the foreclosure violations that took place in 2009 and 2010, the Justice Department is coordinating closely with the Office of the Comptroller and the Federal Reserve Board, which are conducting separate reviews of 12 mortgage servicers under the Independent Foreclosure Review process."
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