JPMorgan Chase & Co (NYSE: JPM) is being sued in for allegedly instructing homeowners to stop making payments on their mortgage so that they could be considered for a loan modification and then repossessed the homes when the consumer followed the bank’s advice.
Faiz and Khadua Jahani are suing JPMorgan Chase and its predecessor, Washington Mutual Bank, on their own behalf and on behalf of the public.
“I’ve seen this happen to so many people,” their attorney said. “When they come in here to tell me their story, I can actually tell it to them.”
In court documents, Jahanis say they contacted the bank in December 2008 “to indicate that they were having trouble paying their mortgage and would like to discuss a possible loan modification.”
The Jahanis allege that the bank told them “that they would not work with plaintiffs at all because they were currently not in breach of their loan terms. Plaintiffs were specifically advised at that time to stop making payments for a period of three months, at which time defendants would consider a loan modification. Plaintiffs were specifically informed that as long as they were current on their mortgage payments, that defendants would not consider a loan modification.”
The court complaint also said, “Reasonably relying on the direction of defendants, plaintiffs stopped making their loan payments. Plaintiffs are informed and believe and thereon allege that defendants immediately reported to the various credit reporting agencies (Equifax, Experian and TransUnion) that plaintiffs were late on their mortgage payments. On or about June 23, 2009, defendants sent a letter to plaintiff entitled ‘Notice of Intent to Foreclose,’ indicating that plaintiffs were past due in their mortgage in the amount of $100.65 and that plaintiffs need to bring the account current within 30 days to avoid foreclosure proceedings. No Notice of Default accompanied the letter, nor was any Notice of Default ever served on plaintiffs.”
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