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.