The details of a Chase Bank foreclosure lawsuit are important to any prospective home buyer. If you want to avoid wasting your time and money on a shoddy class action lawsuit, the details matter. The foreclosure fraud that brought about the lawsuit against Chase Bank was uncovered by the Office of the Comptroller of the Currency (OCC). That’s why the lawsuit name is “Chase Bankruptcy Fraud”. The OCC, which is a division of the Federal Deposit Insurance Corporation (FDIC), found that Chase intentionally made it harder for borrowers to save their homes through loan modifications.
Lawsuit Against Chase
There are many similarities between this foreclosure fraud lawsuit and another pending in Florida. According to the FDIC, Chase Bank repeatedly tried to circumvent the Home Affordable Modification Program (HAMP) by signing non-disclosure agreements with homeowners. HAMP is designed to help homeowners who can’t keep up with mortgage payments through federal stimulus programs. Chase signed agreements with at least 100 homeowners as well as entering into agreements with other lenders to limit HAMP’s effects. Chase allegedly tried to circumvent HAMP by conditioning homeowners’ loan modifications on their ability to submit HAMP application forms to their banks.
In the current foreclosure situation, homeowners are trying to submit loan modification applications to their Chase Bank.
But they are denied outright or are told their application will be declined unless they enroll in a Chase Bank owned loan modification program. There is no guarantee that there will ever be any help from Chase Bank officials to modify mortgage loans. The lawsuit names Chase Bank as the defendant in this case because they violated HAMP and the Real Estate Settlement Procedures Act (RESPA).
RESPA requires banks to inform applicants of their rights under RESPA and give them an opportunity to challenge the bank’s denial of approval.
Chase apparently violated RESPA by instructing foreclosing attorneys to work in “defiance” of the law. Foreclosing attorneys receive a fixed amount for a set fee when negotiating with Chase. If the bank forecloses on the homeowner, the attorney receives a fee for his services. According to the lawsuit, Chase instructed foreclosing attorneys to work “in defiance” of RESPA.
The lawsuit further states that Chase did not provide any proof that it had any prior unsatisfactory relationship with borrowers when it approved the PPI plans.
The bank’s own records showed no prior unsatisfactory relationship. There was no disclosure of the bank’s relationship with HAMP or any public announcement that it was working with HAMP. Chase also failed to provide any accounting documentation of the money it is disbursing to HAMP borrowers. When homeowners tried to apply for cash from Chase, they were provided only with a receipt stating that the money was being held in an account not under HAMP.
The lawsuit also claims that Chase violated RESPA by allowing its underwriters to use non-standard terms in the loan terms and conditions. In the PPI contract, the bank is required to disclose to borrowers the names of two lenders that will provide financing for a mortgage if the borrower is unable to meet loan qualification requirements. Chase did not disclose the names of these lenders in the PPI contract or in any other communications with borrowers. As a result, this caused Chase to violate the law and should pay damages to the injured parties.
When the lawsuit was filed in 2021, Chase immediately notified all of its Class Members that it was reviewing their contracts.
In the months that followed, Chase made virtually every single disclosure required by the law to its detriment. Chase also continued to force Class Members to enroll in PPI plans even though those plans did not meet the requirements of the law. In addition to allowing Class Members to continue to suffer financially, Chase forced them to enroll in PPI despite the fact that it was unlawful to do so under RESPA and the United States government’s Fair Debt Collections Practices Act (FDCPA). It was only after the United States Senate Permanent Subcommittee on Consumer Protection and Insurance held a hearing on the matter that Chase finally informed Class Members of its responsibility to disclose the true terms of its residential loan underwriters.
Chase was, at that point, well within its rights to force Class Members to sign up for PPI plans even though the contract provides no benefits whatsoever to the client. This was the crux of the lawsuit: it was the fraudulent misrepresentation of the benefits of Chase’s PPP loan product that created a likelihood of forcing thousands of Class Members into a PPP loan that did not meet their financial needs and which ultimately led to the lawsuit. A majority of Class Members who signed on for Chase’s PPP loan had already been inaccurately underwritten by Chase while the majority of Class Members who signed up for Chase’s PPI plans were not eligible for such loans because of their eligibility requirements. As a result of all of this, Chase has been ordered to pay damages to all of its Class Members who signed on for Chase’s PPI programs even though they were ineligible for the programs in the first place.