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Disabled US Marine Jacob McGreevey Fights PHH Mortgage And Their Trump Allies In Washington To Reclaim His Illegally Foreclosed Home

PHH Mortgage apparently had no idea how badly they screwed the pooch with one single decision in 2010. In that one moment, some nameless manager at PHH Mortgage made the decision to foreclose on Jacob McGreevey. The McGreevey foreclosure would come back to haunt PHH Mortgage. The foreclosure would also plunge it into multi-million dollar clash with the CFPB and the state of Oregon.

Jacob McGreevey was in the Marine Corp and was fighting Al-Qaeda in Iraq on that day. McGreevey returned home after his third tour in Iraq just days before his lender was planning to throw his belongings to the curb. He knew they had violated the Servicemembers Civil Relief Act

The SCRA prevents lenders from foreclosing on active duty military personnel while they are deployed in a combat zone. 

After four tours in combat zones, the battle-hardened McGreevey relished a good fight and he got it. The fight now also includes him, the CFPB and the state of Oregon on one side. PHH Mortgage and the Trump Administration on the other side.

Knowledge Is Power

McGreevey enlisted in the Marines in 2000. His first active-duty assignment came in 2003 when he was part of the invasion of Iraq.

The Marine Corps called him back to Iraq and Afghanistan for three more tours. He was also in Fallujah.

In all, he spent about four years in the Middle East. 

McGreevey bought a house on Northeast 24th Court between deployments. He made a mistake many soldiers make during his third combat tour. He trusted the wrong person to make the mortgage payments.

McGreevey returned from his third tour in June 2010 in time to watch PHH Mortgage to throw his possessions to the curb.

McGreevey was unaware of his rights under the SCRA. So he didn’t contest it. 

At the end of McGreevey’s final deployment ended in 2012, he had risen to staff sergeant. He also suffered from post-traumatic stress syndrome and a back injury. 

McGreevey began reinventing himself for civilian life after 12 years in the military. He earned a business degree from Portland State University and got a job at a bank.

While working at the bank he began learning about consumer protection laws. He was also learning about the Servicemembers Civil Relief Act. 

The law prohibits banks and other creditors from foreclosing, garnishing, evicting or repossessing assets from service members while they are on active duty or within 12 months of leaving the service. It is the creditor’s obligation to determine whether the debtor is protected by the law.

McGreevey Recruits Former Commanding Officer

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Jacob McGreevey’s attorney and former commanding officer, Attorney Sean Riddell

McGreevey looked up his former CO Sean Riddell. Riddell was now practicing law across the river in Portland, Oregon. He had developed a reputation for being a hard-nosed prosecutor turned civil lawyer after leaving the Marine Corps. 

Riddell sued PHH Mortgage and Northwest Trustee Services. Northwest Trustee Services actually implemented the foreclosure on behalf of PHH.

The former Marine claimed the facts were simple. PHH Mortgage foreclosed on McGreevey’s house two months after he began his third tour and within the 12-month window of his active duty. Thus, McGreevey was protected under the SCRA and the foreclosure was illegal.

PHH Mortgage didn’t focus on the central issue of whether their foreclosure violated federal law. Rather, PHH Mortgage and Northwest Trustee argued McGreevey waited too long to file his complaint.

The SCRA has no statute of limitations. Yet, most courts have elected to apply a time limit based on the statute of limitations in the most closely analogous state law. This gray area gave the two companies the opening they needed. PHH lawyers argued that under Washington law McGreevey only had four years from the date of the foreclosure to file his lawsuit. Riddell argued for six years.

A federal judge in Seattle accepted the four-year limit. Even removing the 15 months McGreevey served in 2011-12 from the computation, more than four years had passed between the foreclosure and filing of the suit. Riddell appealed the decision to the 9th Circuit Court of Appeals.

Sean Riddell told Oregon Live:

I’m not going to tell a four-tour combat veteran that he needs to take another one for the good of the order.

US Attorney General Jeff Sessions Steps In And Sides With PHH

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CFPB Director Richard Cordray

Last November, the Obama Administration announced they were cracking down on financial service companies that jerked around veterans. The US Department of Justice even began taking steps to do it. Unfortunately, that all ended in January with the inauguration of Donald Trump as President. 

The Justice Department did intervene in MGrevey’s case on March 29th. The DOJ sided with PHH Mortgage and Northwest Trustee. DOJ lawyers said they were not taking a position on the merits of McGreevey’s complaint. Instead, they echoed PHH Mortgage’s argument that the four-year statute of limitations should apply. They also argued that McGreevey’s case should be dismissed.

Two weeks before it sided with PHH Mortgage in the McGreevey case, the DOJ intervened in the ongoing multi-million dollar conflict between PHH and the Consumer Financial Protection Bureau. The CFPB contended that PHH had been operating a mortgage insurance kickback scheme for more than a decade. The scheme cost PHH customers hundreds of millions of dollars. 

CFPB Director Richard Cordray unilaterally increased the fine against PHH Mortgage from $6 million to $109 million. The U.S. Court of Appeals for the D.C. Circuit froze the penalty after the lender appealed.

Last week, the U.S. Court of Appeals for the D.C. Circuit held a rehearing en banc at the request of the CFPB. PHH brought in D.C. power lawyer and former Solicitor General Ted Olson to make oral arguments.

The Oregon Department of Justice sought to intervene in McGreevey’s appeal on his behalf in May although he lives in Washington state. The state of Oregon urged the appeals court justices to “give the benefit of any ambiguity or doubt to the veteran who left his home to serve four tours of duty in Iraq.”