BofA Military Foreclosure SCRA Class Action Lawsuit

By Sarah Mirando | August 3, 2012

Category: Bank of America Class Action Lawsuit and Settlement News

By Kimberly Mirando

A federal class action lawsuit claims Bank of America forecloses on homes of military personnel on active duty, in violation of the Servicemembers Civil Relief Act.

The Bank of America SCRA class action lawsuit was filed by Alabama resident Morgan Murphy, a 13-year U.S. Navy officer who was called for active duty in Afghanistan in July 2010, and deployed on September 17, 2010. Bank of America holds a first mortgage on his Birmingham residence. Prior to leaving for Afghanistan, Murphy contacted Bank of America by telephone to submit his military orders and to learn what protection he would receive pursuant to the SCRA.

According to his class action lawsuit, a BofA customer service representative told Murphy that he would not have to make a payment on his BofA home mortgage until January 1, 2012 and that there would be no negative credit reporting until after December 1, 2011. Murphy was also informed that he could ask BofA for a loan modification upon his return from service. Murphy was also told that he was protected under the SCRA until September 2012.

Despite these promises, Murphy was informed in November 2011 that Bank of America had issued a negative credit report to credit reporting agencies and that his credit score had dropped from a high of 800 in June 2005 to 663 as of March 26, 2012. He was also informed that Bank of America would hold a foreclosure sale on his home on August 2, 2012 – contradicting the representations made by Bank of America.

The SCRA was enacted to protect those men and women who serve in the United States military from the financial consequences of leaving their jobs and homes to be on active duty, allowing them to devote their entire energy to the defense needs of the Nation. This includes the temporary suspension of judicial and administrative proceedings and transactions such as foreclosures and adversely reporting the creditworthiness of servicemembers to credit agencies.

Bank of America “has failed and willfully refused to comply with the SCRA, depriving the men and women who have served the United States military of clearly established rights. BofA has made adverse reports relating to the creditworthiness of servicemembers protected by the Act, proceeded with foreclosures in violation of the Act and engaged in other activities contrary to the clear mandate of the Act,” the Bank of America SCRA class action lawsuit states.

“The SCRA empowers courts to stay the sale, foreclosure or seizure of a servicemember’s home or other property and renders any sale, foreclosure or seizure that takes place during the grace period after the servicemember’s completion of military service invalid unless it is pursuant to a court order granted before [such action],” the class action lawsuit continues.

The Bank of America military foreclosure class action lawsuit is brought on behalf of all servicemembers with loans originated prior to the period of the servicemember’s active military service who, within the statute of limitations: (1) were on active duty or had the protection of SCRA or were within the grace period; (2) whose credit was adversely reported during the period in which he or she was protected by the SCRA; (3) who has had foreclosure threatened or completed in violation of the SCRA; or (4) whose interest rates were not properly maintained at 6% or less effective on the dates of the servicemember’s first day of active duty.

A copy of the Bank of America Military Foreclosure Class Action Lawsuit can be found here.

The case is Morgan Murphy v. Bank of America, U.S. District Court, Northern District of Alabama, Southern Division.