Military Families Under Attack From Mortgage Servicers

Submitted by Jen Jones on Tue, 03/15/2011 - 11:03am

Military Families Under Attack From Mortgage Servicers

With its many Armed Forces outposts, bases and camps, North Carolina is among a select group of states that are home to a storied U.S. military tradition as well as large military and veteran populations. As such, citizens of North Carolina and other states are often familiar not only with the duties and honorable service of these military men and women, but are also aware of the many laws passed to give veterans preferred status as a token for their former and continuing sacrifice. Common veteran’s status benefits can include continued health care following discharge for those wounded in active service and, particularly salient in the current economic climate, preference in job hiring pools.

But for all of the benefits that veteran’s status affords, news is emerging that many service men and women have also paid a heavy price for their sacrifice in the wake of the recent real estate reckoning.

According to a new report The New York Times reporter Diana B. Henriques, the Justice Department is now investigating a recent string of foreclosures on military families. “The Justice Department is investigating allegations that a mortgage subsidiary of Morgan Stanley foreclosed on almost two dozen military families from 2006 to 2008 in violation of a longstanding law aimed at preventing such action. A department spokeswoman confirmed on Friday that the Morgan Stanley unit, Saxon Mortgage Services, is one of several mortgage and lending companies being investigated by its civil rights division. The inquiry is focused on possible violations of a federal law that bars lenders from foreclosing on active-duty service members without a court hearing.”

While Morgan Stanley continues to remain tight-lipped about the Justice Department’s investigation of its foreclosure practices, a recent regulatory filing revealed that the company was indeed “responding to subpoenas and requests for information” regarding its compliance (or lack thereof) with the Servicemembers Civil Relief Act, the law that governs the actions creditors can take against active duty service members. The investigation came to light in federal court documents showing that Saxon and two co-defendants had illegally seized and sold the home of Sgt. James B. Hurley, a Michigan National Guard member who lost his home while he was serving in Iraq in 2005. “According to people present in the courtroom, the discussions of the Saxon filing indicated that as many as 23 military foreclosures were under scrutiny in the Justice Department investigation.”

If you are an active-duty man or woman, it is important to understand—now more than ever—that under the civil relief act, “a judge must hold a hearing at which the service member is represented before granting a lender the right to foreclose on the service member’s home, even in states where a court order is not required for civilian foreclosures.” If you feel your home has been foreclosed upon in violation of this law, in addition to contacting your mortgage servicer, it may be in your best interest to contact a military family advocate, many of whom are already aware that banks and other lenders, like Morgan Stanley, were frequently violating the law since the beginnings of the housing crisis.

If you an active service man or woman or even a veteran who is unable to find relief under the civil relief act, there’s still hope from getting out form underneath an underwater home by considering the many safe havens of debt dissolution that a personal bankruptcy filing can provide. Nevertheless, because of the nuances of bankruptcy as it relates to members of the armed forces, a qualified bankruptcy attorney is important during the bankruptcy process to help you navigate any uncertain waters and work in your best interests throughout the duration of the case, regardless of your current status. The bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or you can make your own appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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