JP Morgan Chase and WAMU Face More Lawsuits over Freezing Home Equity Loans without Basis

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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.
JP Morgan Chase Tower

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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.

 Click here to read my Sun-Sentinel Talk Back South Florida blog: The recovery's missing life line: a line of credit.   

(Also find a variety of links to similar homeowner and consumer complaints that illuminate why consumers are fed up with big banks -and their policies!)

UPDATES you may find of interest:

See Jan 2010 Update

August 2010
 Chase/WAMU foreclosure case dismissed; FL Judge finds fraud.

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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.

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.

Chase canceled my HELOC in December 2008. When I called to find out why, I was told that it was because of my credit status. They said they were reviewing all the WaMu HELOC and closing those who they considered "credit risks." I had an automaitc payment withdrawal set up and never missed a payment. Then a few months later, I received a letter from Chase telling me I was 3 months behind in my payments. I checked the account and realized they had not withdrawn the payments for 3 months. Once again I called them and was told they had a computer glitch when they transferred accounts from WaMu. I told them that I would pay the 3 months in arrears but they wanted interest and late fees attached. I told them that since this was their glitch, I did not believe I owed late charges and increased interest. I wrote a QWR asking for an accounting. They were adding attorney fees and other charges.

How do I join this class action? Who do I contact?



I too have tried to find an attorney that would take on Chase for a class action law suit. First, they refused to give the SSCRA 6% interest to my husband and myself as he was deployed to Afghanistan last year. Secondley, I started a Home Loan Modification with Chase on December of 2008, and they continue to tell me my information has expired and I have sent ten times over each document that they have asked. Furthermore, they reduced my loan amount for a trial period, I was never late, and while paying during this trial period that was to be 3 months but is now 9 months and counting, they were reporting to the Credit agencies that i was late and added extensive fee's that add up each month while they sit on my Loan Modification. They have yet to call me to tell me what was needed, as I had to call Chase and find out where we were.. This is still pending and as they have told me.."It is in underwritting". IT has been there for 18 months. The new law on Loan Modifications states that it is to be executed within a certain time frame...3 months I believe. How can i start a class action because I KNOW that Chase is not only doing this to me, but many others. Also, the SSCRA denied and we meet each and every point of the law. Chase was the ONLY bank that refused. I need so much information and need to find people who have had simular with Chase.

Maybe one day they will understand how the equation is supposed to work. banks do not want to help taxpaying customers but expect us to help them whenever they are in need of money. Isn't it suppose to work both ways? The reason we aren't getting anywhere is because the help is only flowing one way. Dollars flow out to big banks but don't trickle down to the people who need to jump start the economy by spending some of it. Just like in any relationship, if everyone is only concerned about one party, then the other party suffers and eventually finds themselves drained and shut off. If we are going to spend billions of tax payer dollars and they hoard it and proudly claim their profits, then it only stands to reason we will give up, dry up and the only ones who have money are the banks. ya, I am sick and tired of it all.

My husband and I have also had trouble with Wamu/Chase. Problems with PMI, Escrow, payments and the Loan Modification process. Very hard to get information. While going thru the modification process, we too, had to send the same information over and over.The process has gone on and on since Dec 2008. Stopped receiving statements, but I continued to pay monthly. Once we received the trial plan agreements we were told to skip a month and no payment was due til the plan started, now they are saying we are an extra payment behind. Not only that the trial plan payments are not counted as a full payment, show they are showing us more payments behind.
Finally I contacted an attorney. They ought to be ashamed of themselves.
Oh! If you are getting the nasty phone calls, just tell them you are recording the conversation.

I have the same story as the others with Chase home fin they where to help us with a 203K which is a Hud remodle for handicap I had to use a wheelchair for my legs are not work they hurt if im on them for more than 10 min at time have trouble getting in and out of my tub and was told about the 203k with hud so I call Chase who that who got are loan with when our last bank sold our mortgage Chase got it and what a night mare it was I have my proof i save and printed out the e-mail with Chase loan officers where they lied and said they didnt know anything about the 203k and at first I was upset and did everything and time went on and it finally came down to they wanted to forclose on house and we had to file bankruptcy so i filed a accoplaont with HYD about them and that has been over year and so now they said Chase did nothing wrong that HUD could do anything about what about I did find add with HUD pn line that Chase does there 203K loans but no Chase did nothing wrong Im taking them to court if I have to file it myself and show they judge all my paperwork it is in black and white all the lies they did two remod saying thats how we needed to go with this hope program not with 203k because they knew nothing about it they just sign up with HUD to do them but no one knows how to do them some bank officers makes you feel self a;so have letter after making payments to Chase they ask me what to do with money well I dont work for bank but if u make a house payment send in their statments with the check that to me would say I would like for it to go to house payment they cash the check but to this day have never taken payment off they used for what i couldnt tell you but I have the statements showing im telling the truth upset in Al

were can i sign up for this law suit?

Enroll in a mass joinder lawsuit against Chase Mortgage with forclosure protection call or e-mail me Directly - They will not forclose your home if you are enrolled in this lawsuit

Jason Messer
National Home Advocacy Group
151 Kalmus Drive, Suite B-250
Costa Mesa | CA | 92626
Direct: 949 274 8631

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