Active Servicemembers Entitled To Waiver Of Prepayment Penalty On Home Mortgages In Some Cases As DOJ Completes Homecomings Probe

From the Civil Rights Division of U.S. Department of Justice:

• The Justice Department [Monday] announced the resolution of its investigation of Homecomings Financial, LLC (Homecomings), under the Servicemembers Civil Relief Act (SCRA). The SCRA suspends or modifies certain civil obligations of individuals serving on active duty in the military.(1)

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• Homecomings and GMAC Mortgage, LLC now will waive prepayment penalties upon request on residential mortgage loans obtained by active duty servicemembers who receive permanent change of station orders to bases 30 miles or more from their current residences.(2)

For the DOJ press release, see The Justice Department Resolves Investigation Under Servicemembers Civil Relief Act of Homecomings Financial, LLC.

(1) According to the DOJ press release, the Civil Rights Division has reviewed numerous allegations of SCRA violations (ie. foreclosure on home mortgage loans without court orders, waivers of prepayment penalties on home mortgage loans, termination of residential lease agreements), has brought one suit under SCRA, and has resolved a number of allegations without the need for litigation. Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator.

(2) According to the press release, this modified policy applies to all loans on owner-occupied properties serviced by Homecomings or GMAC Mortgage, LLC with respect to which one of the following entities retains the contractual right to receive the prepayment penalty: Homecomings or GMAC Mortgage, LLC or either entity's affiliates, including, but not limited to, the Residential Funding Company, LLC and GMAC Bank.