Prepared Remarks of Secretary Shaun Donovan on a Conference Call Discussing
Servicemembers and the Mortgage Servicing Settlement
Tuesday, March 6, 2012
Thank you all for joining us. I’d like to thank Brian Deese and Tom Perez for being remarkable partners in our shared work to get help for families who need it.
And I want to offer a special word of thanks to Holly Petraeus, who is doing extraordinary work with Richard Cordray at the Consumer Financial Protection Bureau to protect our service men and women from financial fraud, exploitation, and abuse.
Last month, I joined officials from across the Obama Administration, as well as an unprecedented coalition of 49 state attorneys general, to announce a $25 billion settlement with the five largest mortgage servicers for misconduct related to foreclosure processing and servicing.
The settlement is a historic step in our ongoing work to help struggling homeowners and hold banks accountable. And today, I want to talk about the ways in which the settlement will help some of the families who have sacrificed everything for their fellow Americans -- the men and women who serve in our nation’s military.
Shamefully, many of our veterans and active duty service men and women were exploited in the years leading up to the economic crisis.
Some lost their homes due to “robo-signing,” in which servicers didn’t review or in some cases even read the foreclosure documents they were processing. Many others sought help on their mortgages but were victimized by dropped calls or lost or delayed paperwork.
Some were forced to sell their homes at a loss simply because they were relocated to a different duty station.
And other military families were charged excessive interest on their mortgages while they were still on active duty, even after they had made a valid request to lower it -- a violation of federal law.
That’s not only wrong -- it’s not who we are as Americans.
No matter what, we should all agree that Americans who serve in the military and put themselves in harm’s way should be able to focus on their jobs and their families -- without having to worry about losing their homes due to greed, recklessness, or irresponsible behavior.
That’s why we worked hard in this settlement to ensure that military families would get the help they need. And it’s why the settlement includes provisions that are specifically tailored to the needs of our men and women in uniform.
First, in a process overseen by the Justice Department, the servicers covered by this settlement will work to determine if any servicemembers were wrongfully foreclosed on -- and if they were, the families could receive benefits ranging from the payment of lost equity plus interest to the return of their home, debt-free.
A similar review will also be conducted to identify and provide full refunds to any military families that were charged excessive interest on their mortgages despite asking for help -- a clear violation of the Servicemembers’ Civil Relief Act signed into law by President Bush.
Third, servicemembers who were forced to sell their homes at a loss due to military relocation can be compensated for it.
Finally, to ensure that more veterans can achieve the dream of sustainable homeownership, the servicers will pay $10 million into the Veterans Housing Benefit Program -- which allows veterans to receive VA-guaranteed loans on terms that make sense for them and their families.
But military families won’t just be compensated. Thanks to the servicing standards we’ve put in place, moving forward a service member will be eligible for a modification of their mortgage even if they are not living in their home.
This is important because if they are temporarily relocated to another base but still keep their home, they will be able to get a mortgage modification even if the home is rented out or empty. Previously, servicemembers would have been ineligible, requiring many active duty men and women to make the painful decision to separate from their families and leave them at home.
All this is in addition to the $25 billion in compensation that the banks will be forced to pay -- funds that will help many military families reduce the principal balance on their loans or catch up on late mortgage payments by reducing their monthly payments.
It reflects this Administration’s commitment to holding the banks accountable -- and to ensuring that the men and women who are willing to risk their lives for their country get treated with the dignity and respect they deserve.