Bank of America Corp. will pay $20 million and Morgan Stanley $2.35 million for improperly foreclosing on members of the military — some of whom were on active duty in Iraq and Afghanistan — under a settlement with the Justice Department.

The settlement with Countrywide Home Loans Servicing LP, a unit of Bank of America, is expected to be the largest ever to come out of the civil rights division of the Justice Department for violations of the Servicemembers Civil Relief Act of 2003. That law bars lenders from foreclosing on active-duty military members and caps their interest rate on all pre-existing consumer debt at 6%.

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