BUSINESS
08/07/2012 11:36 am ET Updated Aug 07, 2012

Bank Of America Violated Law Protecting Active Duty Military, Lawsuit Claims

One Alabama man who served in Afghanistan is claiming Bank of America violated a law that protects active duty service members from financial hardship.

Morgan Murphy alleges BofA began the trying to collect outstanding debts on his home and dinged his credit score during a period in which he was covered by the Servicemembers Civil Relief Act (SCRA). The law protects active duty service members and their families from foreclosure, eviction and other consequences that might result from not being able to meet financial obligations while serving their country.

Murphy's lawyer, Romaine Scott III, told The Huffington Post that others have come forward with similar stories since he filed class-action lawsuit in July, though he has yet to determine exactly how big the class will be.

"Quite honestly I expect it to be a pretty large number of people," Scott said.

That may not come as a surprise, given that financial institutions have illegally foreclosed on more than 300 active duty military in recent years, according to a report from the Government Accountability Office released earlier this month. The report also found financial institutions failed to properly reduce interest rates for at least 15,000 borrowers.

The Department of Justice announced an agreement last month with Capital One requiring the bank to pay $12 million to service members to settle claims that it violated the SCRA. Tom Perez, the assistant attorney general for civil rights, told reporters on a conference call that the DOJ has identified at least 4,000 victims in the Capital One case and that they expect that number to rise. The violations include wrongful foreclosures, car repossessions, credit card interest rate concerns and more.

Murphy claims BofA threatened to foreclose on his home, hurt his credit score and modified his loan above the six percent limit guaranteed by the SCRA, among other allegations, all while he was covered by the law. The lawsuit claims Murphy was told by a BofA staffer that a notice had been sent to his home scheduling a foreclosure for this month. Murphy submitted an application for a temporary order to stop the foreclosure, and BofA responded saying no foreclosure date was scheduled, according Scott, his lawyer.

Still, the bank is moving forward with its debt collection process, Scott said.

For its part, BofA wouldn't comment on the case, but noted that Murphy's home isn't in foreclosure.

"We cannot comment on the litigation but can confirm that Mr. Morgan’s mortgage is currently not in foreclosure," a BofA spokeswoman said in a statement. "We work hard to ensure our military customers receive additional support that caters to their unique needs. When we find mistakes, we address them."

Murphy was called up to serve in Afghanistan starting Sept. 17, 2010. After receiving the orders, Murphy confirmed with a BofA staffer that he would be protected under the SCRA until September 2012, according to the lawsuit. Despite the confirmation, Murphy claims his credit score suffered, his home loan was illegally modified and BofA began the process of foreclosing on his home.

Murphy, who served as the director of media outreach for the NATO-led International Security Assistance Force during his time abroad, is still living in the home, according to Scott. His lawsuit seeks damages for all of his claims.

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