Pub. 4 2013 Issue 2

www.wvbankers.org 8 I n the last four articles in this series, we reviewed the provisions of the Servicemembers Civil Relief Act (“SCRA”). This month, we summarize two recent cases, both involving Coun- trywide/Bank of America, highlighting the importance of compliance with the SCRA and the penalties that can be imposed for failure to comply with the SCRA. In the first case, BAC Home Loans Ser- vicing, LP f/k/a Countrywide Home Loans Servicing, LP (“Countrywide”) and the United States Department of Justice (“DOJ”) agreed to resolve via a “Consent Order” a lawsuit relating to noncompliance with the SCRA. The DOJ claimed Countrywide had wrongfully foreclosed on 160 properties owned by servicemembers in twenty different states over a period of ap- proximately three and a half years. The Consent Order provides for a four-year term of oversight by the federal gov- ernment, including a number of items Countrywide must comply with and steps the company must take. • Injunctive relief. The agreement included an injunction against “foreclosing on the pre-service mortgages of SCRA protected borrowers without providing the protections conferred by the SCRA.” • Policies and Procedures/ Written Correspondence. The Consent Order requires Countrywide to develop policies and procedures ensuring compliance with the SCRA, the timing of when actions may be taken, and how it must handle foreclosing on real property subject to the SCRA. The handling of foreclosures includes DOJ review and approval of letters and waivers Countrywide sends to borrowers when a borrower indicates they are not interested in retaining the property. • Quarterly Reports and Reviews. The Consent Order requires Countrywide to “develop and implement a foreclosure monitoring program designed to ensure compliance” with the SCRA, which must be submitted to the DOJ for review and approval. The quarterly review is presented to top bank officials, who must sign off on it. In the event a quarterly review determines a violation of the SCRA has occurred, Countrywide must determine the reason for the violation, take prompt corrective action, take all necessary action against employees or agents involved, provide financial compensation, and modify, if necessary, the SCRA policies and procedures to ensure against future violations. Any violations uncovered, along with the remedial actions taken and any documentation or analysis relating thereto, must be documented in the quarterly reports. The quarterly reviews must be submitted to the DOJ, which may object and meet and confer with Countrywide regarding the DOJ’s objection. • Compliance Training – Internal and External. The Consent Order requires Countrywide to develop a training program to train managers and employees in positions connected to the servicing of loans or who “have significant involvement in any aspect of the mortgage foreclosure process.” The training materials must be submitted to and reviewed by the DOJ, and the training must occur annually. The training process also applies to all employees who “subsequently” become involved in customer service for servicemembers’ mortgage loans or Servicemembers Civil Relief Act: Why Compliance Is Important Angela L. Beblo and Brienne T. Marco, Spilman Thomas & Battle, PLLC