Mortgage Lawsuit Continues for JPMorgan Chase

By Stevie Duffin Updated on 12/14/2012

By Daniel Duffield

JP Morgan Chase & Co’s attempts to discontinue a lawsuit which involves a possible deception of homeowners about modifying their mortgages failed today as U.S. District Judge Richard Stearns  ruled to continue the proceedings.
Stearns, allowing homeowners to follow up these assertions, also allowed claims that Morgan’s Chase unit deepened homeowners’ debt by the inappropriate extension the modification procedure, resulting in added fees to defaulted loans and premature foreclosures processed as modifications were still being discussed.

"(Some plaintiffs) allege that they would have fared better economically had their homes been foreclosed by Chase at the outset instead of at the end of a drawn-out and ultimately futile modification process that Chase had no real intention of honoring," Stearns wrote. "These are, of course, allegations -- but for present purposes, the court must credit them."

Amy Bonitatibus, spokeswoman for JPMorgan Chase, stated that the bank endeavors to observe HAMP guidelines and would not comment on the lawsuit. Lynn Sarko, a lawyer representing the plaintiffs, stated that he intends to close the case “swiftly” and is pleased with Stearns’ decision not to throw out the case.

The lawsuit consists of 16 separate complaints from homeowners nationwide. Several other major banks, Bank of America Corp and Citigroup Inc, have also been brought to court over HAMP. These banks, along with many others, participated in a $25 billion settlement of foreclosure abuse in February.

Created in 2009, HAMP initially strove to assist desperate homeowners by relaxing loan terms. Though originally intended to reach 3 to 4 million people, only 1.03 million homeowners managed to receive permanent modifications, data from the Treasury Department reveals.

Many have criticized the program for being confusing. In coming to his decision, Stearns cited complaints in which fees were masked by mortgage jargon, such as "G Speedpay Fee, Corp., Advance Adjustment, Late Charge, Misc. F/C and B/R Expenses, Misc. Corporate Disbursement, and Property Preservation."

JPMorgan shares were down 75 cents, a 2 percent decline, closing at $36.14 on Monday trading. The KBW Bank Index fell 0.8 percent.

The case is In re: JPMorgan Chase Mortgage Modification Litigation, U.S. District Court, District of Massachusetts, No. 11-md-02290.