After years of harming homeowners with its foreclosure shenanigans, JP Mortgage Chase may finally pay for its crimes. Sources say the maligned bank reached a preliminary $13 billion mortgage settlement with the U.S. government this week, although the settlement will likely cost the bank roughly $9 billion after taxes are deducted.
Major Bank Reaches Deal With Foreclosure Watchdogs
According to reports, $4 billion of the settlement will go directly towards consumers who were hurt by the bank’s fraudulent foreclosure actions. The other $7 billion would take the form of punitive fines, which, in theory, would help dissuade JP Morgan Chase and other major banks from taking similar actions in the future.
The settlement is a direct result of an effort by the Obama Administration to investigate the sale of mortgage-backed securities, the collapse of which was one of the primary causes of the financial crisis. These securities were created when banks took home loans and sold them to third parties. Thousands upon thousands of loans were shuffled through this process.
The tactic, however, depended on rising home values, but when home values started to plummet, huge numbers of home loans went into default, and the mortgage-backed securities collapsed. Unfortunately for consumers, when the defaults started to occur, banks often couldn’t find their original promissory notes, and began engaging in widespread fraud.
JP Morgan Chase Punished for Foreclosure Fraud
Among the fraudulent activities that led government officials to file their claim against JP Morgan Chase were forging foreclosure documents, illegally pushing consumers out of their homes before a foreclosure sale was authorized, and countless violations of state procedural laws.
The extreme nature and extent of the crimes against homeowners in foreclosure led to the massive settlement. The chief executive of JP Morgan Chase, Jamie Dimon, visited Washington this week to plead for mercy, but it appears the government was able to secure a historically large settlement.
Of course, while the settlement is quite large, it still won’t sink JP Morgan Chase. In fact, some observers speculate that the settlement won’t change the bank’s actions at all. If you are being bullied by an aggressive home loan lender, contact an Illinois foreclosure attorney today to make sure it isn’t engaging in illegal foreclosure activities.
Rusty Payton is a a real estate broker with iMove Chicago and partner with the Illinois law firm of PaytonDann. He has over 24 years experience in real estate and bankruptcy matters. He may be contacted at 321-702-1000 or at firstname.lastname@example.org.
"A Huge Billion Dollar Slumlord." That is how one tenant describes her landlord - one of a new crop of investment firms buying and renting residential homes by the tens of thousands across the United States. This article from the Huufington Post is eye opening. The lesson here is to know your landlord. These days it is well worth your time to do a little due dilligence of your own to learn who is the atual owner of the property you wish to rent. Are they local? What is their reputation for maintenance and repair? Do they have local offices and management and maintenance personel? These are important questions that if you take the time to ask can make your rental home an enjoyable experience.
While it may appear that the housing market is rebounding, there remains a vast pool of homes that are "underwater" - their owners obligated to pay substantially more to first, second and even third mortgage lenders. Short sales have been one solution. In a short sale, the owner agrees to sell her property for a price which is less than the debt owed and asked her lender(s) to agree to release their lien voluntarily. But that solution has its limitations. First, the owner has to be able and willing to sell. What if the owner wants to stay? Second, the short sale process is grueling in terms of the documentation that lenders require and ultimately the owner is at the whim of the lender(s) to approve.
So, if not a short sale then what? A chapter 13 bankruptcy may be the best alternative. In a chapter 13, an underwater homeowner may be able to "strip off" (void) all junior liens which are below the present value of the property and use a chapter 13 plan to repay past due installments over the life of a 3-5 year bankruptcy plan. Additionally, chapter 13 offers even greater possibilities for those owning mixed-use property (2-4 flats), investment property, vacation homes and any loan where the security given to the lender includes something in addition to the owner's principal residence. In those situations, chapter 13 not only allows the owner to "strip off" junior liens but to also "strip down" the first mortgage to the present value of the property. For example, assume an owner has a 2-flat with a first mortgage of $250,000 and a second mortgage of $50,000 and further assume that the property has a present value of $175,000. The owner could propose a plan the voids entirely the second mortgage and pays the first mortgage back based upon a principal amount of $175,000. The owner has, in effect, shed $75,000 of mortgage debt while getting to keep their home.
"Strip offs" and "strip downs" are important tools to consider when working with a homeowner with an underwater mortgage. Clients seeking to pursue such a strategy should consult with an attorney experience in bankruptcy and real estate. Short sales have their place, but there are alternatives for those who seek them out.
Rusty Payton is a a real estate broker and partner with the Illinois law firm of PaytonDann. He has over 24 years experience in real estate and bankruptcy matters. He may be contacted at 321-702-1000 or at email@example.com.
A landmark settlement that promised to provide relief for millions of homeowners in foreclosure has fallen short of its intended goals, according to a report from the Chicago Tribune. So in response to consumer complaints about continued issues with mortgage servicers, the terms of the settlement will soon be strengthened.
The $25 billion settlement, which was announced in February 2012, was supposed to compensate homeowners who were the victims of foreclosure fraud. As part of the settlement, the nation’s five largest servicers also agreed to clean up their acts.
But attorneys general in several states, including Illinois Attorney General Lisa Madigan, believe that the mortgage servicers aren’t holding up their end of the bargain.
According to Madigan, the settlement was “supposed to eliminate headaches for borrowers, but homeowners continue to report problems.” Alarmingly, in Illinois over the past few months, 60 percent of the foreclosure cases reviewed by Madigan’s office included major errors.
In response to the new trend of fraudulent activities among mortgage servicers, officials have announced changes to the settlement, although only Bank of America and Wells Fargo have agreed to the changes thus far.
The new rules require banks to give homeowners 60 days to submit extra documents that would help them modify their loan before the banks foreclose. Previously, homeowners only had 30 days to do this. In addition, the banks have agreed to monitor their employees more closely, and give homeowners more specific tips on how to avoid foreclosure.
If you believe your mortgage servicer isn’t communicating properly with you about your home loan, learn more about your legal rights by calling an Illinois foreclosure attorney today.