Countrywide To Pay $20M For Improper Foreclosures On US Military Members

LOS ANGELES (CBS) — A Calabasas-based lender has been ordered to pay over $20 million for having improperly foreclosed on active duty members of the Armed Forces, the U.S. Justice Department announced Thursday.

In a settlement with the federal government, Countrywide Financial — now a unit of Bank of America — agreed to resolve allegations that it foreclosed on the homes of about 160 service members between January 2006 and May 2009 without seeking court orders, according to the department.

The company also agreed to pay any military member wrongfully foreclosed upon during that period and repair any negative credit report entries related to the issue, it said.

The complaint filed in Los Angeles federal court alleges that Countrywide violated the 2003 Service Members Civil Relief Act by not consistently checking the military status of borrowers on whom it foreclosed through at least May 31, 2009.

"Countrywide Home Loans failed to protect and respect the rights of our service members, failed to comply with clearly mandated procedures and foreclosed against homeowners who are valiantly serving our nation," said Andre Birotte Jr., U.S. Attorney for the Central District of California.

"Military families lost their homes when Countrywide violated the law, causing undue stress to wartime personnel who have been protected from such actions since the Civil War."

The Justice Department alleges that Countrywide foreclosed in many instances when it knew, or should have known, about customers' military status, including those who have served honorably in Iraq and Afghanistan.

The investigation stems from a referral by the U.S. Marine Corps regarding an active duty service member who was facing foreclosure by Countrywide, according to Justice Department officials.

Countrywide was the largest mortgage lender in the country before collapsing in 2007, leading to its acquisition by Bank of America Corp.

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