Chase has been sued in New York City by three homeowners that claim they were denied permanent mortgage modifications under the federal Home Affordable Modification Program despite the fact that they should have been eligible.
Chase claims that their incomes were inadequate for a permanent loan modifications but refused to specify what the income qualifications were. You’ve got to love that Chase.
It isn’t clear if this lawsuit is the same one we previously reported on.
The basics are that Chase has been recommending to customers facing hardships but current on their loans that they stop paying the loans otherwise they won’t be considered for a loan modification. This ends up causing all kinds of problems down the road when the customer is eventually denied a loan mod (most are) and Chase either demands all the payments in arrears immediately or ends up foreclosing in parallel with the loan modification process. In either case, it’s not good.
David Lowman is the CEO of home lending at JP Morgan Chase. During recent testimony before the House Committee on Financial Services, in response to questions about what people could do if there weren’t getting help with problems like, being in a loan modification program but still getting collection letters, he told the committee that people should come to him for help.
As the video link above shows, he literally got mobbed after making that statement. Anyone with problems should take him up on his offer and try to contact him for help.
This blog seems to think (i.e. states as fact) that Chase loan modifications are simply a tool the bank uses to get more money out of people before they foreclose on them and calls the whole program a scam.
Update 4/21/10: Here is another story that is essentially the same: Chase strings someone along while they make trial modification payments, tells them they are approved, and then denies them and demands a balloon payment of all they are behind, which the customer can’t make, so Chase forecloses.
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.
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.
Here is another interesting case that outlines the importance of the details associated with a mortgage and how failure of the bank to pay close attention to all the details may give someone an edge in a foreclosure action. In this particular case, two individuals obtained a first from WaMu in 1999 and then a second from another local bank. The missing details were that both the deed and the loans mentioned only the property and not the mobile home that was on it. As such, the mobile home was considered personal property and not part of the lien placed upon the real property, or simply the land, as unlike a non-mobile home, a mobile home is not considered part of the real property, because, well, its mobile. 🙂
The homeowners were eventually otherwise SOL because the state laws in this case allowed the banks to attach their personal property as well, but this simply serves as an example of how banks have not paid attention to the small details over the last decade or more.
Foreclosure, Loan modification | admin May 4, 2010 | 
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