JPMorgan Chase Paying $50 Million for Lying to Bankruptcy Court and Filers
Image source: Flickr User Michael Premo
When you're struggling to make your mortgage payments and are just getting by, that's hard enough. But it's doubly so when your mortgage lender is cheating you. After a lengthy Department of Justice investigation into the shady tactics of Chase related to homeowner bankruptcy, they negotiated a $50 million settlement. More than 25,000 impacted homeowners will receive cash payments, loan forgiveness or mortgage credit.
What JPMorgan Chase Is Accused of Doing
The lender filed more than 50,000 statements in various bankruptcy courts without proper review and/or with false signatures. Half the notices had signatures of employees who had quit working at Chase before the notices were sent or had signatures of employees who had nothing to do with the documents much less being involved in reviewing them. Still other notices were signed by third parties not employed by Chase that also did not review the documents for accuracy.
What the Government Said About Chase's Actions
Acting Associate Attorney General Stuart Delery said, “It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did. Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.” What's more shocking still is that, save the investigation, Chase likely would never have admitted to the abuse and illegal activity.
How the $50m Settlement Breaks Down and Who's Getting the Cash
The victims of Chase's illegal activities were all troubled homeowners in bankruptcy which makes this breach of ethics all the worse. These were people already struggling that could little afford for their mortgage lender to overcharge them in violation of their contracts and bankruptcy law. Here's how the $50 million settlement will work:
- 18,000+ homeowners that were sent inaccurate and late filed escrow statements will share in $4.8 million of restitution
- 12,000+ homeowners hit with payment increases without notification will receive $10.8 million in mortgage credits or payment refunds
- 8,000+ homeowners with misapplied escrow will share in a pot of $4.9 million resulting in a refund of about $600 per mortgage
- 400+ homeowners who were sent inaccurate payment increase notices while in bankruptcy will share $22.4 million in credits and second lien forgiveness
- Another $7.5 million will go to the American Bankruptcy Institute to support for financial education programs on credit abuse resistance.
What This Means for You
If JPMorgan Chase was your mortgage lender while you were in bankruptcy, you might have a share in some of these restitution funds. If you know Chase was your lender, and you were in bankruptcy while you held a mortgage with them, call (866) 451-2327 to find out if you're due funds. You may have missed out on legal notices if you moved or lost your home to foreclosure during the process. If you feel Chase's actions contributed to you losing your home when you otherwise would not have, you are still free to file a lawsuit against them despite this settlement.
It's always smart money to check statements from your creditors, but it can be complicated to confirm that you're being correctly charged because financial contracts are convoluted. It would be nice to see consumer protection statutes enacted that require all consumer facing credit agreements be written in plain language. Until then, you have to be on your guard, review statements, compare them back to your master agreement when you see changes and press the creditor if you notice discrepancies. As this JPMorgan Chase case clearly shows, creditors only have their best interests at heart, and it's up to you to protect your finances.
If you're living paycheck to paycheck...
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Contact the law offices of John T Orcutt to find out if your debt circumstances are a fit for bankruptcy relief. Call +1-919-646-2654 for a free consultation at one of our convenient locations in Durham, Raleigh, Fayetteville, Garner, Wilson or Greensboro.