Banks desire to reduce documentation fees created a huge liability

Banks thought they were being smart when the got together and formed MERS, a system to record mortgage transactions so banks could avoid paying the county recording fees.  But the system is blowing up in their faces in a number of ways.

The first problem is that the information in the MERS system appears in many cases to be grossly incomplete, making it hard or impossible to prove the chain of title on mortgages.  This problem is made worse by the fact that many of the original documents were lost or intentionally destroyed.  This has spurred investors who bought soured mortgages to sue the banks claiming the mortgages were never properly transferred to them.

The next problem is that some judges and jurisdictions are refusing to accept registration in the MERS system as adequate proof of the title on a mortgage.  And with many of the original documents gone, it may prove impossible for banks either as mortgage holders or servicers to prove they have the right to foreclose.

The latest headache that has come to light is that states and counties may decide to sue banks to recover the lost filing fees.  Some laws on the books in some states dictate pretty stiff penalties for failure to pay the required fees when the ownership of a mortgage is transferred.  For banks not to have realized this liability seems an awfully large oversight and some are claiming that damages and penalties could run into the many tens or hundreds of billions.

Here come the foreclosure fraud class action lawsuits

If your counting the number of class action lawsuits filed against Chase for fraud in filing false documents related to foreclosures, scratch a couple of marks into your bed post; two new class action lawsuits were filed this week.

Nov 10 2010. JP Morgan Chase bank’s foreclosure fraud process.

In a regulatory filing submitted yesterday, November 9, JPMorgan Chase & Co. acknowledged that two separate class action lawsuits have been filed against their company, alleging fraud related to its decision to temporarily stop foreclosure proceedings.

Two months ago, Chase had placed a moratorium on foreclosure proceedings, while it launched an internal investigation into the possibility of discrepancies in its foreclosure documents.

Last week, Chase announced it would start refilling foreclosure documents within a few weeks.

One of the class action lawsuits was filed in the US District Court for the Northern District of Illinois, charging Washington Mutual Bank and JPMorgan Chase & Co. with knowingly filing false documentation.

A separate suit against Chase Home Finance was filed in California state court as well.

JPMorgan also acknowledged a class action lawsuit filed on behalf of Charles Schwab and Cambridge Place Investment Management, a hedge fund company. That suit was related to mortgage backed securities sold to the investors with the demand that the bank buy back the securities due to their faulty foreclosure documents.

Bank of America and Citigroup had already disclosed that similar suits were filed against them as well.

In both class action lawsuits, they allege “common law fraud and misrepresentation, as well as violations of state consumer fraud statutes.”

No dates have been announced as to when the proceedings will begin.

While JPMorgan has fared better on Wall Street than most of its competitors, consumer confidence is definitely fading, as shares in the bank dropped 0.3% in early trading on Tuesday.

How to tell Chase what you really think

People express their frustration with Chase in different ways and today I was pleasantly surprised to find a protester out in front of my local Chase branch.  If we all responded to Chase’s shenanigans like her, perhaps they wouldn’t misbehave so much.

Chase customer service says one thing, Chase does another

We received this story from a reader:

I have been a customer with Chase for over 15 years and have dealt with the chronically terrible service which seems to just worse year of year. Most recently, I had an issue with fraudulent charges. After trying to work this out for a month dealing with Chase employees in three different countries who never talked to each other, the issue was finally resolved. However, as a result of this issue, all I wanted was to divorce Chase and never deal with them again. Because this was a business account, the branch employees advised they would do restricted access on my account so while I was transitioning away from chase, ACH debits and automatic transactions would not apply to this account while I waited for other invoices to come through so I could shut this account.

Needless to say, I trusted them and was SHOCKED when I logged into my account as I was making final preparations to close the account to find that automatic transactions had not been stopped and I was overdrawn receiving insufficient funds fees daily for charges I was not aware would be authorized by Chase. Furthermore, there were additional fraudulent transactions, exactly what sparked this issue to begin with.

I started the process to resolve this avoiding my local branch as they had clearly misled me. After escalating the issue I finally was directed to Janette Reves in Texas as my customer “case manager”. Keep in mind I have written documentation for all this, and numerous recorded phone transactions for the branch office told me. Janette Reves indicated to investigate my case she needed to confirm with the local branch. Well, conveniently, Gerrod Black ther gentlemen who handled my initial fraudulent case left for a ten day cruise the day this began and his supervisor took over. Wouldn’t you know it, Janette confirmed his supervisor is no longer employed by Chase. Janette used the word of an employee who wasn’t there for this and an employee who is no longer there to say I was incorrect and they wouldn’t refund. I asked her to investigate the further fraudulent charges and resulting insufficient fund fees. That was on October 28. It has been two weeks and multiple messages later with absolutely no response. I know I am right here and have the documentation to prove it. They are making a huge mistake over a whopping $264. I have closed every other account with them, but this account remains open as it is being resolved. The information is public, just curious if you have information of who I can contact above Janette Reves? Many thanks for your efforts!

This is not atypical behavior for Chase:

1. Getting different stories about how things work from different Chase employees and then Chase goes and does something completely different than you were told
2. People at Chase making up stories far from the truth to cover their butts or simply making stuff up when they don’t know what they are talking about.

But going higher up can sometimes help resolve problem.  Take a look at our How to Contact Chase page to find more higher up contact information.

Additionally, if you aren’t getting satisfaction, it is always a good idea to file complaints with the BBB, your state’s consumer protection office, and the Federal Reserve, who regulates chase.  You can find information for Chase’s regulators and other people to complain to on our What You Can Do page.

Chase parallel foreclosure victim wins house back

By Henni Espinosa, ABS-CBN North America Bureau . Redwood Shores, CA – 73-year Corazon Palma made history when she became the first person in California to win her house back from her lender even after her 4-bedroom house in San Jose, California was foreclosed.

Palma staged a battle against Washington Mutual through a wrongful foreclosure lawsuit – and she refused to back down.

Palma is a cancer-survivor who lives on a fixed income. So in 2008, she asked her lender to lower her monthly mortgage payments of $3,900 a month.

A year later, she said that her lender promised to send her a loan modification packet. Instead, a Coldwell Banker real estate broker came to her house to notify her that her house had been foreclosed at a Trustee Sale.

Palma said, “I was so shocked. It felt like a bucket of cold water fell on me. When they gave me the note, I called my attorney.”

She sought the help of Attorney Kenneth Graham, who represents many Filipino homeowners in Northern California.

Graham said, “WAMU deceived Mrs. Palma into thinking they were making loan modification efforts on her behalf while they were secretly planning a foreclosure sale on the property.”

Her fight in court paid off. Last January, a judge ruled that Palma be awarded back her house.

Last Friday, she attended a court hearing in San Jose to find out the terms of the judgment. Palma would have to wait until December 3 to know if she will end up getting her house back for free.

Graham said, “The best case scenario for Mrs. Palma is if a judge rules that the lender has no further right to exercise the loan against the property. Hence, Mrs. Palma gets the property for free.”

Worst case scenario for Palma – is that she continues to pay her mortage but at a lower monthly rate.

No matter the judgment, Palma said she’s glad she won the fight to keep her home.

She said, “But I know other homeowners are being abused as well and lenders really need to be taught a lesson for deceptive practices to stop.”

If you are an abused homeowner and feel that your house has been wrongfully foreclosed, you may contact the Law Offices of Kenneth Graham at (925) 932-0170 or visit their office at 1575 Treat Blvd. #105, Walnut Creek, California or their website, www.elaws.com.

Unsolicited Chase loan modification leads to foreclosure

This story is particular heinous on the part of Chase.  The homeowners were tooling along just fine in the home they owned for 17 years, having never missed a mortgage payment, when out of the blue Chase offered them an unsolicited loan modification and the chance to lower their payment.  Under the various stages of the process of working towards a permanent modification, the homeowners made all required payments.

Chase then dropped a bomb on them and told them they were behind $50,000 and needed to pay up or get foreclosed upon.  Unable to come up with the surprise balloon payment, Chase foreclosed upon them and they are now fighting eviction.

Chase’s behavior essentially amount to entrapment.

This is a new low for Chase.

Do departments at Chase EVER talk to each other?

You would think that getting different information from different people at Chase would be an anomaly, but it is actually quite common from what we have seen, such as this story:

I live in Indiana. Filed Chapter 7 Bankruptcy in March 2010, finalized in September. House market value was set at $170,000. Was able in late September to finally modify my primary mortgage to continue it (owing $157,000). Was trying to work with Chase Bank on my second mortgage ($43,000), they sent me a letter dated October 18 that they wanted to work with me on a loan modification and told me I had 30 days to contact them. I recieved the letter by certified mail on October 30. I called to start the process on November 2 and was to the loan had been charged off on October 29 and no one will explain why.

What are my concerns at this point? What should I worry about? I know they cannot recover from me personally because of the bankruptcy, but do you think foreclosure is a concern?

JD Powers banking satisfaction survey says it all – customers think Chase sucks

JD Powers released its 2010 retail banking satisfaction survey and the ratings for Chase aren’t good.  Chase’s recent satisfaction survey results are the lowest its had in years.

For instance, in California and New England, Chase got a 2 out of 5 star overall satisfaction rating.

The percentage of people who said they would consider leaving their bank went from 54% three years ago to 66% today.