Minnesota National Guard member lost his home while serving in Iraq.
Army Staff Sgt. Phillip Harry learned his house had been foreclosed upon and sold in a letter forwarded to him while he was serving in Iraq.
Harry, a member of the Minnesota National Guard, filed suit on Friday against his mortgage company, alleging the company violated a federal law protecting service members from losing their homes while they are deployed.
Reflecting a convergence of two major social issues: the home foreclosure crisis and the return of thousands of members of the military from Iraq and Afghanistan, attorneys for Harry are seeking to have the suit certified as a class action, saying hundreds of service members are likely to have faced the same situation.
The U.S. Treasury launched an investigation last year into 10 leading banks that may have illegally foreclosed on the mortgages of almost 5,000 members of the U.S. military, some of them activated to duty in Iraq and Afghanistan.
The suit filed in U.S. District Court in Minnesota accuses Illinois-based HSBC Mortgage Services of violations of the Servicemembers Civil Relief Act, signed into law in 2003 as a way of easing the economic and legal burdens on military personnel called to service.
The suit alleges that the company has foreclosed on service members' mortgages while they were on active duty and evicted them and their families without giving them a chance to challenge the foreclosures in court. It also alleges that HSBC recklessly filed papers that said Harry was not a member of the military at the time of the sale, when a simple check of public records would have shown he was serving overseas.
"There is no excuse for a sophisticated, multi-national bank like HSBC to ignore these laws and foreclose on our soldiers' homes while they are away serving our country," said Vildan Teske, one of Harry's attorneys. "Our service members deserve better."
Asked for comment Friday, a spokesman for HSBC North America said it is company policy not to respond to pending lawsuits.
According to the suit, Harry bought his house on James Avenue N. in Minneapolis in 2005 and the mortgage was later assigned to HSBC. On March 25, 2008, Harry was ordered to report to the National Guard training site at Camp Ripley and then to active duty on April 15 for training to deploy to Iraq. He served in Iraq until June 2009.
On the day he reported for training at Fort Sill, Okla., HSBC began a foreclosure sale, and attempted to serve Harry the notice on April 21, according to the suit. The suit alleges that without Harry's knowledge, HSBC bought the house at sheriff's auction for $32,602.
As a result, Harry lost his house, personal property, the equity he had built up and suffered damage to his credit rating, the suit said. He now lives in Zimmerman, Minn.
Last year, congressional hearings focused on violations of the act.
"Our nation's war fighters and their families should not have to fight to keep their piece of the American dream while fighting on foreign soil defending the fundamental right that each and every one of us has," said Rep. Jeff Miller, R-Fla., chairman of the House Committee on Veterans Affairs.
During the hearings, a representative of J.P. Morgan Chase acknowledged that it had overcharged service members or improperly foreclosed on them, but said it was taking steps to correct the mistakes.
Mark Brunswick • 612-673-4434