Chase accused of short sale fraud

According to an article from CNBC, several big banks, including Chase, have been accused of short sale fraud as second lien holders.

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But here’s what’s not legal and what’s apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say “on the side,” I mean in cash, off the HUD settlement statements, so the first lien holder doesn’t see it.

“They are pretty clear and pretty upfront about the fact that if the first lender knows they are getting paid, the first lender will kill the short sale,” says Brandt. “So these second lenders are asking for the payments off the closing documents, off the HUD statement, usually in a cashiers check prior to closing. Once they receive that payment, they will allow the short sale to go through, which according to RESPA laws and the lawyers that we have spoken to on the topic is not legal.”

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Brandt told me he’s heard from at least 200 agents that they’ve had these requests made by representatives of Citi Mortgage, JP Morgan Chase, Bank of America and other large banks.

Chase’s 22 cent solution

We pointed this out in a post yesterday, but I thought it was so ridiculous it was worth mentioning again.

An article in the Arizona Sun newspaper discussing people’s difficulty getting loan modifications with Chase gave as an example one customer who was able to get a loan modification successfully.  His total reduction in monthly payment after months of working hard to get a modification?  A whopping 22 cents.

More Chase loan modification badness in the news

Other than on sites specifically dedicated to fighting abusive banks, like ours, or peoples personal blogs, there haven’t been too many stories about the trials and tribulations of loan modifications in the mainstream press.  So it is nice to see a paper like the Arizona Daily Sun print a story about an Arizona woman and her struggles for the last 13 months trying to get a loan modification and stave off foreclosure.

And wouldn’t you know it, her bank just happens to be Chase.

It is a very typical Chase loan modification story with hours spent on the phone, repeatedly lost paperwork, Chase employees not returning her calls, and never speaking to the same person twice.

The article talks about one Chase customer that was able to get a loan modification, for a whopping 22 cents per month reduction in his payment.

Dear Chase, you *did* receive our last payment!

Have you just persevered through 12 months of trying to get a loan modification or short sale or ANYTHING at all to happen with Chase and still have nothing to show for it?  I found this cute little story from this blog, which make a pretty good argument for strategically defaulting on your mortgage, if the circumstances are right.

Well, I know a homeowner who lives in Scottsdale, Arizona… lovely couple… wouldn’t want to embarrass them by using their real names, so I’ll just refer to them as the Campbell’s.

So, just the other evening Mr. Campbell calls me to say hello, and to tell me that he and his wife decided to strategically default on their mortgage.  Have you heard about this… this strategic default thing that’s become so hip this past year?

It’s when a homeowner who could probably pay the mortgage payment, decides that watching any further incompetence on the part of the government and the banks, along with more home equity, is just more than he or she can bear.  They called you guys at Chase about a hundred times to talk to you about modifying their loan, but you know how you guys are, so nothing went anywhere.

Then one day someone sent Mr. Campbell a link to an article on my blog, and I happened to be going on about the topic of strategic default.  So… funny story… they had been thinking about strategically defaulting anyway and wouldn’t you know it… after reading my column, they decided to go ahead and commence defaulting strategically.

So, after about 30 years as a homeowner, and making plenty of money to handle the mortgage payment, he and his wife stop making their mortgage payment… they toast the decision with champagne.

You see, they owe $865,000 on their home, which was just appraised at $310,000, and interestingly enough, also from reading my column, they came to understand the fact that they hadn’t done anything to cause this situation, nothing at all.  It was the banks that caused this mess, and now they were expecting homeowners like he and his wife, to pick up the tab.  So, they finally said… no, no thank you.

Luckily, she’s not on the loan, so she already went out and bought their new place, right across the street from the old one, as it turns out, and they figure they’ve got at least a year to move, since they plan to do everything possible to delay you guys from foreclosing.  They’re my heroes…

Okay, so here’s the message I promised I’d pass on to as many JPMorgan Chase people as possible… so, Mr. Campbell calls me one evening, and tells me he’s sorry to bother… knows I’m busy… I tell him it’s no problem and ask how he’s been holding up…

He says just fine, and he sounds truly happy… strategic defaulters are always happy, in fact they’re the only happy people that ever call me… everyone else is about to pop cyanide pills, or pop a cap in Jamie Dimon’s ass… one or the other… okay, sorry… I’m getting to my message…

He tells me, “Martin, we just wanted to tell you that we stopped making our payments, and couldn’t be happier.  Like a giant burden has been lifted.”

I said, “Glad to hear it, you sound great!”

And he said, “I just wanted to call you because Chase called me this evening, and I wanted to know if you could pass a message along to them on your blog.”

I said, “Sure thing, what would you like me to tell them?”

He said, “Well, like I was saying, we stopped making our payments as of April…”

“Right…” I said.

“So, Chase called me this evening after dinner.”

“Yes…” I replied.

He went on… “The woman said: Mr. Campbell, we haven’t received your last payment.  So, I said… OH YES YOU HAVE!”

New York accuses Chase of dragging its feet with mortgage modifications

Hoping to succeed where Washington has largely failed, New York City’s comptroller, John C. Liu, and six large unions plan to begin a campaign on Wednesday to press the biggest banks to do more to prevent foreclosures in the New York area.

Mr. Liu said the group would send Citigroup, JPMorgan Chase, Bank of America and Wells Fargo, among others, a letter that criticizes them for dragging their feet on modifying mortgages that are underwater or delinquent, and that urges them to do “everything possible” to avert foreclosures.

Depending on the response the coalition members get, they might move pension funds and bank deposits to other institutions, according to union officials.

Read more …

Could loan mods suddently get much easier?

Treasury Secretary Timothy Geithner was on The News Hour the other night and was asked about the dismal results for successful loan modifications.  Apparently, there are $73 Billion in available funds and only a few hundred million have been spent on HAMP loan modifications to date.  I wasn’t aware it was that bad.  Pretty pathetic.

Well, things might be about to change for the better according to this article:

July 8, 2010 – Borrowers who have not been having any luck trying to get a loan modification with their mortgage holder will be happy to know about the recently initiated loan modification process.

Due to the low percentage of permanent modifications that are being offered the Treasury Department is now offering struggling homeowners a streamlined procedure with less paperwork and a short turnaround time.

Until recently the success rate of the Home Affordable Modification Program (HAMP) was rather dismal. Over $73 billion dollars that was accessible to fund HAMP was not being used to help homeowners who were facing foreclosure.

However, as of the beginning of this quarter new timelines and guidelines kicked in. It’s hoped that these changes will, at the least, let homeowners know whether they qualify for HAMP is a more reasonable amount of time.

It is now possible to get an answer to a loan modification application within thirty days.

If approved, it will be possible for borrowers who find it difficult to make their existing monthly payments, or those who will probably be delinquent in the foreseeable future, to reduce their net payable monthly payments or increase their mortgage tenure and get a more affordable mortgage loan repayment plan.

A search of the Internet will help those in need discover what the home affordable modification guidelines are – the ones that they need to know in order to qualify for HAMP.

So, it is now possible to get an answer within 30 days.  Will those answers mostly be no?  Will Chase all-of-a-sudden stop losing paperwork?

Thousands dropping out of loan modification programs

By May of this year, one in seven people who had applied for a loan modification in Florida in January had dropped out of the program.  (SunSentinal article)

That may sound like a shocking headline for a newspaper, but with all the loan mod stories I see every week, I am surprised the number of people dropping out isn’t greater.  If you are familiar with the past abusive tactics of the insurance industry, such as denying all claims the first time they are submitted (because most people won’t resubmit a claim), you can see very similar tactics being used with loan modifications; make it so difficult and frustrating for people that a large number of them simply drop out and let their homes be foreclosed upon. I’ll admit that I’ve given Chase the benefit of the doubt in the past in wondering whether Chase is inept or malicious with regard to loan modifications.  It is starting to seem like Chase has a serious agenda to deny people loan modifications.

Chase claims that people are dropping out because they aren’t complying with the loan modification rules.  If you read some of the loan modification stories on our site, you’ll know that simply can’t be the reason for the majority of people who drop out.  Imagine that you’ve been pursuing a loan modification for nine months, because one of a two-income earner family lost their job and despite looking for 18 months, has been unable to find work.  In that time, you would probably have experienced:

• Chase loosing your paperwork several times
• Chase dragging their feet so long they claim your paperwork was too old and needed to be resubmitted (about the same as starting over)
• Chase not returning your calls, faxes, and emails
• Chase changing the person you had to deal with several times
• Chase pursuing foreclosure while telling you you were almost approved for a loan modification
• Chase telling you to stop paying your mortgage so you could qualify for a loan modification in the first place
• Chase not accepting their own checking statements because the final page was not properly numbered

With all these impediments, it is simply hilarious to hear Chase trying to put the blame on customers.

Or if you are really unlucky, Chase might have approved you for a permanent modification and then claimed you asked to drop out of it.

Biggest Chase loan modofication screw-up yet!

This is a strange story but it sure sounds like something Chase would do.  First, a little background.  The percentage of people who apply for a loan modification with Chase is large, and the number that get them, is small.  This might be partially due to the fact that standard operating procedures for Chase loan modifications is for them to lose your paperwork multiple times, causing you to resubmit.  This sounds suspiciously similar to some insurance companies who automatically deny a claim the first time it is submitted.

So, when Robert Davis actually was approved for a permanent loan modification, it was such an anomaly that a news program did a big story on him, profiling his tortuous path to getting approved.

Happy ending to the story, right?

Not quite.

It seems that Chase now claims that he himself requested that his loan modification be canceled.  They also claim that they never received the final paperwork, despite Davis’ Fed-ex tracking that says it was delivered and phone calls to Chase employees who claimed the paperwork had been received.

So where does that leave him?  Chase is now requesting that he begin the process all over again.

Simply astounding that Chase could screw up this badly.