February 9, 2015 / 11:38 PM / 3 years ago

U.S. service members to receive $123 million in foreclosure relief

(Reuters) - Members of the U.S. armed forces will receive $123.4 million as a first round of payments is made under a federal law to protect service members from foreclosures, in conjunction with the $25 billion nationwide mortgage settlement reached in February 2012.

The U.S. Department of Justice, which announced the payments on Monday, said 666 service members and their co-borrowers will receive $88 million from JPMorgan Chase & Co (JPM.N), Wells Fargo & Co (WFC.N), Citigroup Inc (C.N) and Ally Financial Inc (ALLY.N).

Another 286 service members and their co-borrowers previously received $35.4 million under a 2011 settlement with Bank of America Corp (BAC.N), the Justice Department said.

Lenders had been accused of violating the Servicemembers Civil Relief Act, which prohibits non-judicial foreclosures against service members who are on or recently left active duty, and took out their mortgages before their service began.

The foreclosures at issue took place between Jan. 1, 2006 and April 4, 2012, the Justice Department said.

    “Service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country,” Acting Associate Attorney General Stuart Delery said in a statement.

    The banks have cooperated with the government to compensate affected service members, the Justice Department said.

    Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky

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