It was one of five of the nation’s biggest mortgage servicers that agreed to pay $123 million to military members for improper home foreclosures following the 2008 financial crisis. Wells Fargo’s share was $28 million to be paid to 239 borrowers, according to a statement issued by the Justice Department last year. It didn’t admit or deny the allegations.
In the Santander case, the Justice Department first learned that vehicles might have been repossessed illegally through a referral from the U.S. Army’s legal assistance program. The referral involved allegations that the bank took a soldier’s car in the middle of the night after being told that he was at basic training. Santander didn’t admit or deny the department’s claims.
Capital One Financial Corp. agreed to pay $12 million in 2012 over a wider range of allegations that also included improper vehicle seizures. The bank acknowledged that it might not have been in compliance with the law.
A frequent problem in investigations involving asset repossessions is that lenders lack awareness of a borrower’s eligibility for protections. While the Department of Defense maintains a database accessible to banks, recent studies by the U.S. Government Accountability Office found that loan servicers often didn’t check military status. Thousands of people haven’t received proper benefits under the law and oversight by regulators “has been limited,” the GAO has said.
Widespread Violations
John Odom Jr., a retired Air Force judge advocate whose Shreveport, Louisiana-based law practice has focused on such cases, said it’s difficult to track how widespread violations of the servicemembers act might be, because it affects a large population that’s often on the move.
“I think the chances are very, very high that there are a lot of them out there," Odom said.