Multi-Party Suit Filed by Homeowners Against JP Morgan Chase et al

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Lawsuit filed by UFAN on behalf of homeowners allegedly injured by the mortgage practices of JP Morgan Chase.

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United Foreclosure Attorney Network

On Tuesday October 18, 2011, United Foreclosure Attorney Network (UFAN) filed suit in Superior Court in Martinez, CA (case number C-11-02390) on behalf of numerous homeowners against JP Morgan Chase and others alleged by Plaintiffs to be involved in a scheme to defraud and otherwise take advantage of investors and borrowers.

The complaint details how the lending practices of JP Morgan Chase led directly to Plaintiffs being placed in harmful and predatory loans. After a loosening of lending restrictions in the 1980s, banks like JP Morgan Chase began originating exotic non-prime mortgages with adjustable interest rates. These risky loans were often securitized into mortgage backed securities and sold to investors. Because a bank could quickly recoup amounts spent issuing mortgages by the sale of these residential mortgage backed securities (RMBS), banks incentivized mortgage brokers to participate in the scheme with high fees for origination. According to the filing, these fee incentives encouraged complete disregard for underwriting standards which were used to lure borrowers into highly predatory loans they could not afford.

The complaint alleges that Plaintiffs relied on statements made by JP Morgan Chase employees and mortgage brokers when they accepted bad loans. Plaintiffs were often told that they would be able to afford high loan amounts and were promised the ability to refinance at a later date. It is alleged that in some instances, loan officers blatantly lied to Plaintiffs about the quality of the loans they were receiving. The complaint alleges that Chase not only knew about these broker practices, but encouraged and incentivized them. A Chase internal memo states, “If you do not get Stated/Stated, try resubmitting with slightly higher income. Inch it up $500 to see if you can get the findings you want. Do the same for assets.”

Similarly, the complaint alleges that appraisers were encouraged to inflate property values in order to give borrowers higher loan amounts. The higher the loan amount, the more money JP Morgan Chase was able to make on the sale of the loan. It is argued that the bank incentivized appraisers to falsify property valuations in order to secure a higher loan to sell to investors. The complaint alleges that Plaintiffs borrowed excessively in reliance on inflated appraisals and other statements.

Plaintiffs also argue that because of the sale of their loans, they did not receive the benefit of the contract for which they bargained. Plaintiffs, believing they would be placed into a mortgage with a traditional Lender/Borrower relationship, later found that they did not have a “lender” with whom they could deal. Servicers are not at liberty to make changes to contracts when circumstances are unforeseeably changed. Furthermore, loan servers have an incentive to foreclose whereas a lender has the incentive to modify a loan if it would be more profitable in the long run. Had many homeowners had a lender with whom to deal, they could have restructured the mortgage for a more desirable result for both parties. The complaint details how many Plaintiffs diligently sought modification of their loans but were denied simply because the servicer had no authority to grant a modification.    

The complaint further alleges that the ownership of Plaintiffs notes is unknown, thus questioning the right to enforce the notes. The complaint requests declaratory relief on several matters relating to the parties’ rights and duties under the contract. The complaint further requests clarification on note ownership and the right to enforce.

UFAN has currently filed lawsuits against Bank of America (case # 34-2011-00109314) and Wells Fargo (case # 34-2011-00110146) in Superior Court of Sacramento County, and against Aurora (case # 34-2011-00112919) in Superior Court of Contra Costa County on behalf of borrowers alleged to have been injured by these banks. UFAN will continue to fight for the rights of its clients.

Complementary consultations available.

ABOUT THE UNITED FORECLOSURE ATTORNEY NETWORK

UFAN Legal Group, PC dba United Foreclosure Attorney Network (UFAN) is a Roseville, California-based law firm providing mortgage litigation and other debt related legal services. The dedicated attorneys and staff at UFAN work tirelessly to seek justice and fight for the rights of its clients. For more information call toll free 1-866-400-4242.

This release may constitute attorney advertisement. The information in this release and on the UFAN website (ufanlaw.com) is for general information purposes only. Nothing in this release or on the UFAN website should be taken as legal advice. Prior successes are no guarantee of future performance. Litigation is inherently uncertain and results in litigation are never assured.

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