This great article outlines a lawsuit two homeowners have brought against Chase for the advice they were given to stop payments so they could be considered for a loan modification. We all know what happened after that, they were then threatened with foreclosure repeatedly. One point their attorney makes is that there is a huge disconnect between the departments of the bank that handle loan modifications and foreclosures – they just don’t work together.
The story goes like this:
1. Woman applies for a loan modification
2. Is approved for a trial mod
3. Is then told she is approved for a permanent modification. The verbal approval confirmation goes on for three months as she religiously calls in multiple times every week to check on status and see if they need additional information. Every time she talks to someone during this period, they confirm, she has been approved for a loan modification.
4. Then one day she calls and is told she has been denied. Not only that, that she must now pay all together on one lump sum everything she has missed for the last 6-7 months. She won’t actually be getting a denial letter in the mail, just a foreclosure notice.
5. Have a nice day.
My question for Chase is, why be dishonest like this? Do they simply not have a clue, or is this some type of malicious game to extract more money before foreclosure? These are peoples lives and homes here, and many of them were duped into the unmanageable loans they have (by WaMu), according to the recent Senate investigations.
As this article points out, despite claiming to have hired 16,000 people to staff their home ownership centers and help people with loan modifications, it clearly isn’t enough if you believe the many posts every day/week/month from people struggling through the process.
Chase easily brought home a hefty profit of $3.3 billion in the 1st quarter 2010, mostly from its investment banking division and trading arm. It is amazing what you can do when the government will give you money for almost nothing. Their loan portfolio is of course still performing poorly, a little more poorly in the 1st quarter 2010 than the previous quarter, as they have added to their loan reserves.
What is interesting though is information in this article about Chase’s 2nd lien loan portfolio, a not insubstantial $131 billion in size. While only 5% of the outstanding loans are delinquent, about 50% of those loans are underwater. Is it just me or does that sound like a HUGE time bomb waiting to go off.
If you want to read Chase’s David Lowman’s full recent testimony before Congress here it is.
This article is a must-read for anyone going through a loan modification with some useful tips. Among them are don’t take the banks word that you should stop paying your mortgage to qualify for a loan modification; only do so after you have in writing that if you stop payments you will not be foreclosed upon as a result. Attorney Melissa Huelsman, subject of the article strongly believes that JP Morgan Chase CEO Jamie Dimon would rather spend money fighting rather than working out solutions, and that Chase is the only large bank that will not consider principle reduction.
Update 4/13/10: This stance against principle reduction was reiterated in today’s testimony before congress. The bottom line, they don’t think customers deserve to have their principle reduced because they entered into a contract and should be held to it. What about all the fraudulent and abusive sub-prime loans?
At least one couple is standing up to Chase for their parallel foreclosure tactics. This is how it works: Chase tells you that in order to qualify for a loan modification you must be delinquent on your loan, so they advise you to stop paying it. Then, through a long drawn out loan modification process, they start foreclosure proceedings without telling you and eventually foreclose on your home. Whether they are doing this maliciously or just out of incompetence (left hand not talking to right hand) is anyone’s guess.
This blog entry by a lawyer contacting Chase on behalf of a customer trying to negotiate a loan modification is funny, and very telling. Turns out even lawyers have difficulty getting somewhere with Chase. Some of the tactics Chase employees use to deflect responsibility: There is no manager in the branch (at 10:30 on a weekday?), transferring you to the managers voice mail box which is so full you can’t leave a message, and telling you the loan is in “review” and can’t be discussed. Basically, they just make up any old excuse.
Oops, they did it again. Chase has once again told a homeowner to stop making payments so they will qualify for a loan modification and then foreclosed upon them while this was happening without telling them.
Foreclosure, Lawsuits, Loan modification | admin April 17, 2010 | 
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