In a putative class action, a U.S. Army sergeant has alleged that CitiMortgage Inc., a subsidiary of Citigroup, wrongfully foreclosed on his home while he was on active military duty.

The suit, filed in the federal district court in Manhattan, alleges that CitiMortgage filed a foreclosure on the home of Jorge Rodriguez while he was preparing for deployment in Iraq. The Servicemembers Civil Relief Act (SCRA) is intended to protect military personnel from foreclosure while on active duty, but, as the lawsuit alleges, CitiMortgage falsely testified in an affidavit that Rodriguez was not on active service. The lawsuit further claims that CitiMortgage initiated thousands of foreclosure proceedings against servicemembers without ensuring that those servicemembers were not on active duty. If the Court grants class action status to the suit, Rodriguez will be able to seek relief on behalf of all military personnel harmed by similar conduct by CitiMortgage.

Two other lending institutions, Bank of America and Morgan Stanley, have previously agreed to pay over $22 million to settle similar claims.

Despite safeguards like the SCRA, military personnel and veterans have long been the target of predatory lending schemes and other misconduct by banks and other subprime financial institutions. These institutions take advantage of those serving the United States because they are usually young, unaware of the legal protections afforded them, and required to frequently move around the country. Although recent Supreme Court decisions have weakened the class action device, the class action lawsuit remains a viable means to hold such financial institutions liable when their conduct harms hundreds or thousands of people. Indeed, it is often the only way to secure justice when a corporation has harmed thousands of people, but in an amount that makes an individual claim by any one person unfeasible.

Source: Bloomberg, "CitiMortgage Sued by Iraq War Veteran Over Home Foreclosure"