The New York Times has posted an article about a National Guard reservist whose home was foreclosed on while he was deployed in Iraq in 2004 and 2005. Sergeant James B. Hurley returned home in December 2005 to find his Michigan home had been foreclosed on, forcing his wife and children to have to relocate, despite many laws that are designed to protect deployed servicemen from this.
Sgt. Hurley’s National Guard unit was sent to California in the summer of 2004 to train to work as a power-generator mechanic in Iraq. He was advised by veterans who had been deployed to do the same thing to buy his own tools due to lack of resources in Iraq. The expense of the tools combined with a reduced income caused Sgt. Hurley to fall behind on his mortgage- which often happens when part-time soldiers or reservists are deployed. He owed $100,000 on the property and it was put up for action and sold for $70,000.
Sgt. Hurley believed that he was protected by the Service Members Civil-Relief Act, which was created solely to protect those on active duty in the armed services from any legal complications that their forced absence may cause. Under the law, only a judge can authorize a foreclosure on a deployed soldier’s home and can only do so after a hearing where the soldier is represented. The law also caps servicemen’s interest rate at 6%. As of September 11, 2004, he was protected, but the banks threatening foreclosure (Deutsche Bank Trust Company and its subsidiary called Saxon Mortgage Services) continued to refuse any type of relief or assistance, saying that they couldn’t act until they received copies of his individual military orders, which he couldn’t get until later.
Although Saxon’s demand would have been legitimate if Sergeant Hurley had been seeking a lower interest rate, the law did not require him to provide those orders to invoke his foreclosure protections.
Nevertheless, Saxon referred the case to its law firm, Orlans Associates in Troy, Mich., which completed the foreclosure without the court hearing required by law. The law firm filed an affidavit with the local sheriff saying there was no evidence Sergeant Hurley was on military duty. At a sheriff’s sale in October 2004, the bank bought the property for $70,000, less than the $100,000 the sergeant owed on the mortgage.
Orlans acknowledged in a court filing that one of its lawyers learned in April 2005 that Sergeant Hurley had been on active duty since the previous October. Nevertheless, neither Saxon nor the law firm backtracked to ensure the foreclosure had been legal or took steps to prevent the seized property from being sold, according to the court record. Lawyers for Orlans Associates did not respond to a request for comment.
When Sergeant Hurley sued in May 2007, the defendants initially argued that he was not allowed to file a private lawsuit to enforce his rights under the civil relief act. Federal District Judge Gordon J. Quist agreed and threw the case out in the fall of 2008.
This prompted Colonel John S. Odom, a retired Air Force lawyer who was working with Sgt. Hurley’s civilian lawyer, is an expert on the Service Members Civil-Relief Act and appealed the judge’s ruling in December 2008. In March 2009, the judge changed his decision and ruled that Sgt. Hurley’s foreclosure had violated the Civil Relief Act. He also ruled that Sgt. Hurley be paid punitive damages, if applicable.
The banks refused to let it go and brought the case back to court. They argued against paying Sgt. Hurley any sort of damages. The judge ruled in December 2010 that Saxon didn’t have to pay any punitive damages. Colonel Odom says he has challenged the ruling in court and is prepared to appeal, if necessary.
“Nothing says you screwed up as clearly as a big punitive damages award,” he said. “They are a deterrence that warns others not to do the same thing.”
The trial over damages is set to begin in March of this year, making it over four years that Sgt. Hurley has been fighting the system over his wrongful foreclosure.
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