Justice for Soldiers Who Lost Their Homes But Changes to Legal System Needed

A bank's foreclosure on U.S. Army Sgt. James Hurley's house presents another reason- in a long line of reasons- that the American legal system must be revamped. Maybe, our legal system should be more like the British system where the loser has to pay the costs and attorneys fees of the prevailing party. Otherwise, cases will continue the trend that whoever has the biggest wallet will win- and not necessarily on who is actually right.

In the summer 2005, U.S. Army Sgt. James Hurley, serving in the military in Iraq, suddenly found it difficult to reach his wife back home in Michigan. For four days straight, he called and got a troubling message that the line had been disconnected. Eventually, Hurley tracked her down through his uncle.

When he talked to her, he learned that their home had been foreclosed and they were kicked out.

Now, the Servicemembers Civil Relief Act could not be clearer.

(c) SALE OR FORECLOSURE- A sale, foreclosure, or seizure of property for a breach of an obligation described in subsection (a) shall not be valid if made during, or within 90 days after, the period of the servicemember's military service except-

(1) upon a court order granted before such sale, foreclosure, or seizure with a return made and approved by the court; or

(2) if made pursuant to an agreement as provided in section 107.

Nevertheless, Saxon Mortgage Company went through with a foreclosure. Then, instead of owning up to wrongdoing, the mortgage company  fought in court.  And the mortgage company fought hard.   Sgt. Hurley fought with Saxon Mortgage for years over the loss of his home while deployed overseas.

Now, I realize, everyone has a right to their day on court and to fight as hard as possible.  But, look at the battle here.  On the one side: a mortgage company that has broken the law.  A corporate entity with a unlimited means to fight the case.   The mortgage company asserted that Sgt. Hurley had another home that he could use so he wasn't hurt by the foreclosure.

On the other side: a soldier and his family with very limited means and a house stripped away from him while he was oversees.  Family members informed the mortgage company that he was in the military serving in Iraq.  When he returned home to Michigan in early 2006, he and his wife have moved into a small cabin where her parents lived.  He wanted his house back.

Fortunately, Sgt. Hurley was able to hang in through his case.  U.S. District Judge Gordon Quist in Grand Rapids found in 2009 that Saxon and Deutsche Bank Trust Company Americas violated the Servicemembers Civil Relief Act when it foreclosed on Hurley's home in Hartford, Michigan, according to court filings. Hurley settled the case last week in the middle of a damages trial, according to a court filing which didn't disclose terms of the accord.

But, it took years and a lot of money to get the justice.  Most people who lose their homes in foreclosure do not have the ability to finance a case.  They would not be able to last through such an expensive endeavor.   If it wasn't for the perseverance of Sgt. Hurley, the illegal practice would not have been exposed.

Under the American system, Saxon had very little reason to settle even though it was in the wrong.  They could spend on defense with the comfort if Sgt. Hurley did actually get a verdict, the verdict would not contain Sgt. Hurley's attorney's fees unless the court issued extraordinary relief.  Saxon could pile on the legal expense and prolong the case as a way to get Sgt. Hurley to drop the case or settle on terms very favorable to Saxon.  Sgt. Hurley instead fought to the end where Saxon had to own up.

And, by doing so, Sgt. Hurley has exposed a practice and is getting justice for others.  Prompted in part by Hurley's case, the Justice Department on Thursday announced a $22 million settlement with Saxon and a unit of Bank of America to provide relief to more than 170 active-duty military members who experienced improper foreclosures over the past few years.

The Justice Department alleged that the Bank of America unit, formerly part of Countrywide Financial, improperly foreclosed on 160 military personnel between January 2006 and May 2009 and didn't check whether the borrowers were active-duty military.

They also alleged that Saxon Mortgage Services Inc., a subsidiary of Morgan Stanley, foreclosed on 17 servicemembers without obtaining court orders.

Bank of America agreed to pay $20 million, and Saxon Mortgage Services, of Fort Worth, Texas, agreed to pay $2.35 million. If additional military members come forward, the companies have agreed to compensate them beyond those amounts.  On average, Perez said victims in the Saxon case will receive an average of $130,555, while the Countrywide victims will receive about $125,000 each.  JPMorgan Chase has also disclosed in recent months that it improperly foreclosed on 18 servicemembers.

Hurley settled with Saxon Mortgage Services separately in March, but the Justice Department initiated the investigation in response to his case.

Hurley said explained the situation best:.

"These banks know they can't do it, but they turn around and they do it anyway," he said. "Because they're the people who are in power, and they think all the government's going to do is slap their hands."  Add to that, they know they will only be responsible for their own legal bills.

Read more articles about consumer debt by Ted Connolly, co-author of The Road Out of Debt

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Comments

Anonymous
Anonymous
  • 05-31-2011

This post provides a good example of a case where arguable the English-rule would have been better. As the pages of the calendar continue to flip, the English-rule will likley become more and more popular, especially if more author's like Ted Connolly make the case. Informative post.

Anonymous
Anonymous
  • 08-15-2011

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Anonymous
Anonymous
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