Saxon Mortgage SCRA Settlement: $130,555.56 Minimum per Servicemember

What happened

On May 26, 2011 the Justice Department announced a consent order with Saxon Mortgage Services, Inc., a mortgage servicer based in Fort Worth, Texas that the order describes as an indirect wholly owned subsidiary of Morgan Stanley. The order was signed and filed that day in the Northern District of Texas, Dallas Division. DOJ announced it together with a separate settlement with Bank of America's BAC Home Loans Servicing, which has its own page in this ledger.

According to DOJ's 2011 release, the complaint alleged that Saxon foreclosed without court orders on approximately 17 servicemembers from January 2006 through June 2009. A later paragraph of the same release puts the number at approximately 18 and says Saxon allegedly foreclosed on at least 10 of them when it knew or should have known about their military status. DOJ said the servicemembers included people who had served in Iraq, some of them severely injured in the line of duty or living with post-traumatic stress disorder, and that the investigation began with an inquiry from a sergeant who had already settled his own claim against Saxon confidentially. The complaint itself was not found on justice.gov when this record was checked on October 10, 2026; the consent order summarizes it as alleging unlawful foreclosures, and inconsistent checks of borrowers' active duty status, from January 1, 2006 through at least June 30, 2009.

The order cites the statute by its former numbering, 50 U.S.C. app. § 533(c), which GovInfo's edition of the U.S. Code now carries as Section 3953. The claims it resolves concern foreclosures in states that allowed non-judicial foreclosure. It also records that Saxon had strengthened its SCRA procedures in late 2009 to require a Defense Manpower Data Center query before foreclosure, and had given those procedures to the United States on December 14, 2009.

Going forward Saxon had to query the DMDC website before referring a mortgage to foreclosure and within seven days before a non-judicial sale, and to write into its procedures a query within two business days before the sale and within two business days of the expiration of any redemption period (order paragraph 4). To continue a foreclosure on a protected borrower it had to petition a court or obtain a written waiver, and any waiver request had to go out at least 30 days ahead with a letter encouraging the borrower to consult a lawyer (paragraphs 7 and 9). Quarterly sample reviews, an annual compliance review and employee training were required during the order's four-year term (paragraphs 10, 12 and 29).

The law behind this: 50 U.S.C. § 3953

Mortgages and trust deeds: read the statute , or read § 3953 in plain English, with its enforcement record .

The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country.

Our men and women in the military should not have to worry about a bank foreclosing on their home while they bravely serve our country.

Who was covered

Two groups. Servicemembers the United States determined were foreclosed on between January 1, 2006 and June 30, 2009 without the protections of the statute, plus one person foreclosed on in October 2009, were to be paid from the settlement fund (order paragraph 17). Anyone identified in a review of Saxon's non-judicial foreclosures from July 1, 2009 through December 31, 2010 as foreclosed on in violation of the statute was to be compensated, in addition to the fund, consistent with the levels paid to the first group (paragraphs 16 and 20). The order defines an SCRA-protected borrower as one in military service, within nine months after completing it, or a reservist holding orders, at the time of the sale (footnote 3).

What the settlement paid

• $2,350,000 deposited in an interest-bearing Settlement Fund within ten business days of entry (order paragraph 17). Checks to the first group could not exceed the fund plus accrued interest (paragraph 19).
• Servicemembers in the first group had two years from entry to sign the release attached to the order, and no check could be delivered until the servicemember had signed that release (paragraphs 18, 21 and 22). Money left in the fund after two years was to offset Saxon's payments to the later-identified group and its indemnity payments, with any remainder donated, with the court's approval, to nonprofits that assist servicemembers (paragraph 23).
• Saxon had to ask all major credit bureaus to remove trade lines resulting from these foreclosures, could not pursue any amounts still owed on the mortgages, and had to indemnify servicemembers if a trustee or third party tried to collect (paragraph 24).
• DOJ's April 4, 2013 update said Saxon was in the process of paying over $2.5 million to 19 servicemembers whose homes were unlawfully foreclosed on between 2006 and 2010, each to receive a minimum of $130,555.56 plus compensation for any equity lost, with interest. That minimum is DOJ's figure, stated per servicemember: the consent order names no per-person amount and pays each servicemember the amount the United States determines (paragraph 21).

Why this case matters

The $2.35 million was not a ceiling on what Saxon owed. The order set the fund aside for the first group and separately bound Saxon to pay anyone found in the review of July 2009 through 2010 foreclosures consistent with the levels paid to that group, and DOJ's 2013 figures of 19 people and over $2.5 million both exceed what was announced in 2011. The order also shows how the post-service window has moved: in 2011 the order's definition reached sales within nine months after service, and GovInfo's amendment notes show a 2012 law lengthened Section 3953's window to one year. Where Saxon's monitoring turned up a violation, it had to restore the home on request where possible, unless the property had already gone to a bona fide third-party purchaser (paragraph 10 and footnote 6).