Trial Loan Modifications Spur Lawsuit Against JPMorgan Chase
May 5th, 2010 @ 7:44 PM by Amber Nelson
JPMorgan Chase is being sued again by angry homeowners. Three Queens, New York residents, who were recipients of trial mortgage modifications under Obama’s Home Affordable Modification Program, have filed a suit against Chase for reneging on its promises to convert those loans into permanent payment modifications.
Alex Lam, 35, Shanaz Begum, 40, and Tamara Williams, 39 are being represented by the Urban Justice Center and all claim Chase denied them permanent mortgage modifications even though they were eligible under HAMP rules.
In the case of Alex Lam, he was told by his bank last year that he needed to miss a few payments before he could be considered for a modification. He followed that advice and was then approved for a trial modification. During that time his payments were lowered by a significant $900 a month. After making all the new payments on time, Lam expected to Chase to convert the changes into a permanent loan. He was surprised when the bank told him his income was too low to qualify and started foreclosure proceedings on his house.
“I was shocked,” Lam said, as quoted in the New York Daily News. “I followed everything that Chase asked me to do and they said they wouldn’t put me in foreclosure.”
“I’m afraid of losing my house,” he added. “My credit history is ruined. I cannot find a bank to help me refinance.”
The other two plaintiffs were also disqualified on income-related issues.
A spokesman for J.P. Morgan told the Wall Street Journal that said the bank would be “happy to talk with the customers, review their situations and see if we can help.”
According to figure from Chase itself, the bank has offered 750,000 trial modifications from last year through March 2010. Only 25 percent of those have been converted to permanent changes, a sign that HAMP, as it is currently being run, may simply be delaying more foreclosures waves, not preventing them.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.