Justice Department Reaches Settlement with Northwest Trustee Services of Bellevue, Washington, for Illegally Foreclosing on Servicemembers’ Homes

The Department of Justice today announced a settlement with Northwest Trustee Services Inc. (Northwest) of Bellevue, Washington, to resolve a lawsuit alleging that the foreclosure services company violated the Servicemembers Civil Relief Act (SCRA). The complaint, filed in November 2017, alleges that Northwest foreclosed on homes owned by servicemembers without obtaining the required court orders. Under the terms of the settlement, servicemembers who had their homes illegally foreclosed on may each receive compensation of up to $125,000, with a total payout to servicemembers of up to $750,000. Northwest ceased operations in December 2017 and is now being liquidated in state court receivership proceedings. This is the Department’s first SCRA lawsuit against a foreclosure trustee company.

The SCRA protects the rights of servicemembers in military service by suspending or modifying certain civil obligations. The law prohibits foreclosing on the home of a servicemember during military service and one year thereafter without a court order if the mortgage originated prior to the servicemember’s period of military service.

“The Civil Rights Division will never waver in our commitment to vindicating the rights of those who devote themselves to the service of our country,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “We hope this case sends a strong message to foreclosure trustee companies and others that all foreclosures must comply with the Servicemembers Civil Relief Act.”

“Those who serve in our military deserve zealous representation of their rights,” said U.S. Attorney Annette L. Hayes.  “We are working to ensure that servicemembers whose homes were illegally foreclosed on by Northwest Trustee receive up to $125,000 in compensation. Northwest Trustee may have shuttered its foreclosure business, but that does not end its obligation to do right by servicemembers.”

The Department of Justice launched an investigation into Northwest’s practices after United States Marine Corps veteran Jacob McGreevey of Vancouver, Washington submitted a complaint to the Department’s Servicemembers and Veterans Initiative in May 2016. Northwest had foreclosed on Mr. McGreevey’s home in August 2010, less than two months after he was released from active duty in Operation Iraqi Freedom. McGreevey sued both PHH Mortgage (his mortgage servicer) and Northwest in 2016, but a U.S. District Court Judge accepted PHH and Northwest’s argument that McGreevy had waited too long to file his complaint and dismissed the case. The Department’s investigation revealed that, in addition to McGreevey, Northwest had unlawfully foreclosed on other SCRA-protected servicemembers since 2010.

Before entering into receivership, Northwest described itself as a full-service trustee company providing foreclosure services to mortgage lenders in the Western United States.  On March 28, Northwest was placed into a General Receivership under Washington State law.  The company no longer provides foreclosure services.  If it were to reenter the business of providing foreclosure services, the settlement requires the company to implement Department-approved policies, procedures, and training to prevent further SCRA violations.

This case was jointly handled by the Civil Rights Division of the Department of Justice and the United States Attorney’s Office for the Western District of Washington.

The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section, often in partnership with local United States Attorney’s Offices. Since 2011, the Department has obtained over $468 million in monetary relief for servicemembers through its enforcement of the SCRA. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. For more information about the department’s SCRA enforcement, please visit www.servicemembers.gov.