This latest class action lawsuit filed today against Washington Mutual and Chase Bank directly behind two other suits filed this month (see below) will interest many readers who have written or posted on this blog with similar complaints...the closing of Home Equity loans -without cause.
The class action alleges that Washington Mutual Bank and its new parent, JP Morgan Chase engaged in mass reductions of Home Equity Lines of Credit (HELOC) limits and even suspended accounts by falsely claiming that customers' incomes had been reduced, as a way to justify the suspensions.
According to the federal lawsuit, the banks froze millions of dollars in home loans that way.
The suit alleges that Chase and WAMU had no reasonable basis to conclude that their borrowers' finances had in fact declined and that the banks broke their written promises to provide customers with two weeks' notice to substantiate their incomes before taking such action.
The suit was brought on behalf of Jeffrey and Jenifer Schulken who allege that their HELOC account was suspended due to a supposed inability to pay the loan. But the couple - who run their own small business - continued to earn the same amount of money and never missed a payment.
Although federal regulations permit account suspensions when a customer's financial circumstances adversely changes, such action requires both a material change in a borrower's financial situation and the creditor's reasonable belief that the borrower will not be able to repay the HELOC account as agreed.
The lawsuit alleges that Chase and WAMU had no such basis here.
"The Schulkens did everything right. They work hard, pay their bills, and have always honored their relationship with Chase/WAMU," says attorney Jay Edelson, whose law firm, KamberEdelson LLC, represents the Schulkens. "What the banks did to them, and countless others, is simply not right."
The lawsuit comes on the heels of two other class actions recently filed against Chase and WAMU alleging the banks have been systematically - and unlawfully - reducing and freezing customer's home equity credit lines.
The first, Kimball v. Washington Mutual Bank, Henderson Nevada et. al. 3:09-cv-1261 (S.D. Cal.) is also brought by KamberEdelson and challenges the banks' use of faulty Automated Valuation Models to create a pretext for credit limit reductions and account suspensions.
According to the lawsuit, Michell Kimball, a local businesswoman, first learned her HELOC had been frozen when a check she had drawn on the line had been dishonored and, when she called customer service, they informed her that an AVM showed the property value had significantly declined. Using the banks' chosen appraiser, an on-site examination showed the property was worth 1.5 times the AVM's estimate.
The second lawsuit, filed this week by Sherman Oaks attorney David Parisi, is brought on behalf of Garden Grove resident Michael Walsh. Mr. Walsh alleges Chase and WAMU reduced his credit limit after claiming his home had significantly declined in value. In addition to challenging the banks' use of a faulty AVM, the Walsh case further takes issue with the banks' practice of freezing HELOC accounts based on lower declines in value than those permitted under the federal Truth in Lending Act.
To download a copy of the PDF lawsuit, click here.
Consumers continue to report similar experiences involving cut off credit lines, jacked interest rates and an inherent inability to get aid from their lenders or mortgage servicers. These unfair practices continue to significantly harm credit scores and further delay our economic recovery.
(See a variety of links to similar homeowner and consumer complaints that illuminate why consumers are fed up with big banks -and their policies!)
See Jan 2010 Update
The class action alleges that Washington Mutual Bank and its new parent, JP Morgan Chase engaged in mass reductions of Home Equity Lines of Credit (HELOC) limits and even suspended accounts by falsely claiming that customers' incomes had been reduced, as a way to justify the suspensions.
According to the federal lawsuit, the banks froze millions of dollars in home loans that way.
The suit alleges that Chase and WAMU had no reasonable basis to conclude that their borrowers' finances had in fact declined and that the banks broke their written promises to provide customers with two weeks' notice to substantiate their incomes before taking such action.
The suit was brought on behalf of Jeffrey and Jenifer Schulken who allege that their HELOC account was suspended due to a supposed inability to pay the loan. But the couple - who run their own small business - continued to earn the same amount of money and never missed a payment.
Although federal regulations permit account suspensions when a customer's financial circumstances adversely changes, such action requires both a material change in a borrower's financial situation and the creditor's reasonable belief that the borrower will not be able to repay the HELOC account as agreed.
The lawsuit alleges that Chase and WAMU had no such basis here.
"The Schulkens did everything right. They work hard, pay their bills, and have always honored their relationship with Chase/WAMU," says attorney Jay Edelson, whose law firm, KamberEdelson LLC, represents the Schulkens. "What the banks did to them, and countless others, is simply not right."
The lawsuit comes on the heels of two other class actions recently filed against Chase and WAMU alleging the banks have been systematically - and unlawfully - reducing and freezing customer's home equity credit lines.
The first, Kimball v. Washington Mutual Bank, Henderson Nevada et. al. 3:09-cv-1261 (S.D. Cal.) is also brought by KamberEdelson and challenges the banks' use of faulty Automated Valuation Models to create a pretext for credit limit reductions and account suspensions.
According to the lawsuit, Michell Kimball, a local businesswoman, first learned her HELOC had been frozen when a check she had drawn on the line had been dishonored and, when she called customer service, they informed her that an AVM showed the property value had significantly declined. Using the banks' chosen appraiser, an on-site examination showed the property was worth 1.5 times the AVM's estimate.
The second lawsuit, filed this week by Sherman Oaks attorney David Parisi, is brought on behalf of Garden Grove resident Michael Walsh. Mr. Walsh alleges Chase and WAMU reduced his credit limit after claiming his home had significantly declined in value. In addition to challenging the banks' use of a faulty AVM, the Walsh case further takes issue with the banks' practice of freezing HELOC accounts based on lower declines in value than those permitted under the federal Truth in Lending Act.
To download a copy of the PDF lawsuit, click here.
Consumers continue to report similar experiences involving cut off credit lines, jacked interest rates and an inherent inability to get aid from their lenders or mortgage servicers. These unfair practices continue to significantly harm credit scores and further delay our economic recovery.
(See a variety of links to similar homeowner and consumer complaints that illuminate why consumers are fed up with big banks -and their policies!)
See Jan 2010 Update
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Casey Serin should be imprisoned.
This type of activity is unacceptable.
That's why I have started two blogs and am seeing quite a spike in views.
http://www.daily-protest.com
http://www.bloggersagainstchasebank.com
I'm going to be filing a similar suit very soon. Chase cut my equity line claiming the value dropped far below the amount it had actually declined. I paid $400.00 for an appraiser to come out and do a current appraisal. I Sent it to Chase and they replied with a brief letter stating they were not increasing the credit line. they basically wasted $400.00 of my money because they had no intention of reinstating the credit line. Nothing had changed in my financial condition, I have never been late with a payment, my credit is excellent and my score is currently 50 points higher than when I opened the credit line. What's ironic in this whole situation. The Ceo of Chase was on CNBC stating that homeowners should honor the loans they took out and pay for them. Yet, Chase has no problem not honoring their part of the deal.
I loved WAMU, but the Chase suspension of my HELOC, based merely on decline on my property value, was insulting. My principal balance was less than 2% of the credit limit. They might be saving themselves from default through this mass model treatment, but they have lost me as a customer forever. I've cancelled my Chase credit card, bank accounts and HELOC. I'll never go near a Chase again, and I'm soon to have banks out of my life forever. Let them roll themselves happy in all of their money.
Does anyone know of a class action filing in California? Contact info pls.
I have also had my HELOC credit limit suspended. We received a letter from Chase around the beginning of March stating they wanted to update our financial information. They wanted last 2 years of tax returns. It boiled down to they wanted to requalify us for our loan that we've had for 2 years and that was in good standing, never late payments. Failure to cooperate in their request resulted in Chase suspending our HELOC, we can not have any more of our money from the equity of our home. They claim the value of our home has decreased and they want to make sure we can still make our payments (again, our payments have never been paid late). The value of our house is around $225K and our principal is around $75K, so there is equity there. This is not fair of Chase and they are not honoring our original HELOC contract.