Chase admits to misfiling mortgage documents
JPMorgan Chase (JPM) admitted to misfiling more than 50,000 payment change notices in bankruptcy courts that were “improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices,” and will pay more than $50 million to homeowners as part of a settlement with the U.S. Department of Justice over its mortgage practices.
The DOJ announced Tuesday that it reached a settlement agreement with Chase, under which Chase admits that more than 25,000 of the 50,000 fraudulent notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.
The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings, the DOJ also 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,” said Acting Associate Attorney General Stuart Delery.
“Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”
JPMorgan Chase responded to the DOJ’s statement announcing the settlement and took issue with the DOJ’s choice of phrase.
“We do not think it is accurate to characterize as ‘robo-signing’ a process in which a bank employee reviewed the accuracy of the information in each payment change notice. Here, bank employees reviewed the accuracy of the information in the 50,000 PCNs and the notices were accurate over 99% of the time,” Chase Vice President and Head of External Communications Jason Lobo said.
Under the terms of the settlement agreement, Chase will pay more than $50 million to more than 25,000 homeowners who are currently or previously were in bankruptcy. The payments will be made in the form of cash payments, mortgage loan credits and loan forgiveness, including:
- $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases
- $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners
- $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements. This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners
- $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners
- $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program