Arthur Delaney arthur@huffingtonpost.com | HuffPost Reporting
First Posted: 05- 4-10 03:15 PM | Updated: 05- 4-10 04:58 PM
Three frustrated homeowners in New York City are suing JPMorgan Chase over the bank’s failure to permanently modify their mortgages under the Obama administration’s plan to help homeowners avoid foreclosure.
The complaint, filed in federal court in New York, says the plaintiffs, who are represented by attorneys with the nonprofit Urban Justice Center, relied on promises by Chase that they could have their loans modified if they made reduced payments per the Home Affordable Modification Program (HAMP). Despite making payments on time, they’ve received foreclosure threats but no modifications.
One of the plaintiffs, Alex Lam, a 35-year-old restaurant manager, alleges Chase told him to actually stop making payments in order to be eligible for help. In early 2009, Lam contacted Washington Mutual (since absorbed by Chase) about a modification after his adjustable-rate mortgage blew up in his face. He was told he didn’t qualify for help because he was current on his payments.
“Mr. Lam was specifically told that if he stopped making payments for several months, he could be considered for a modification,” the says the complaint.
The next big surprise came in December, when, after making trial payments of $1,568 for the previous six months, Lam was told he owed the bank $12,000. When he protested, Chase relented and told Lam to apply once again for a mod, this time under HAMP. He made his payments until March, when Chase told him he’d failed HAMP’s opaque “Net Present Value” test, meaning the bank determined the investors who owned the loan would make more money via foreclosure than modification. Lam alleges Chase used bogus inputs for the NPV test and that Chase refuses to show its work.
Lam called the situation “very upsetting” in an interview with HuffPost. “I trusted them because they’re a big bank. I did whatever they asked me to.”
HuffPost asked Lam what he wanted from suing Chase.
“Just to get a modification, that’s all I’m asking for,” he said. “Since day one, that’s all I’m asking for.”
HAMP lawsuits have been flying. Last week a 91-year-old veteran of three wars named Peter Ruplenas sued Bank of America over mortgage mod malfeasance in West Virginia.
In April, Faiz and Khadija Jahani of California sued Chase for reasons similar to Lam’s — the bank told them to stop making payments to qualify for help, then foreclosed. A similar case is brewing in Seattle.
Homeowners are supposed to be eligible for HAMP mods if they’re having trouble making monthly payments, owe less than $729,750, took out the loan before January 2009, and if their payment on their first mortgage is more than 31 percent of their income. In theory, if homeowners make reduced payments (typically $500 cheaper) for three months, they are put in “permanent” modifications that last for five years.
But the banks voluntarily participating in HAMP have given permanent mods to just 230,000 homeowners in the program’s first year, a far cry from the three to four million officials said HAMP would help. Meanwhile, frustrated homeowners’ stories of lost paperwork, dishonesty, and incompetence by banks are piling up.
A Chase spokesman declined to comment on the lawsuit.
I find my self in a similar position. I lost my job in January 2009 and finally managed to get another job in July. I immediately rang Chase and arranged to start on the HAMP program. I paid the 3 trial payments and was told to stop.
Then after speaking to a rep every 2 days through Jan and Feb when they alternately said the paperwork was good then bad, I was finally declined for a mod due to NPV. I had 30 days to dispute it and did but never received a response.
Then they tried to sell me a chase mod which I could not afford but they told me to make up the numbers – even giving me exactly the amount I needed to make up so I would qualify for the mod.
Suddenly I was turned down again because they changed the office location and I was to start over again.
So I started again but they would not accept payments for anything in 2010. They said it would ruin the Mod.
Now I have another job with enough money to pay the original amount if they approve the mod again. I am still waiting and getting so frustrated I went to the Freddy Mac meetings I have called and and faxed my paperwork over 20 times at least.
I cannot believe chase is so bad at this.
Now the “interesting thing” in all this is that I worked for a mortgage company and know how they are supposed to do and yet they continually fail to do the right thing.
Chase constantly changes their call center so that it is almost impossible to get the mod done.
I really regret signing with them they are working really hard to ruin my life…..
Chase did me the same when I tried to get my home loan payments down to a lower payment.