It was announced this week that a settlement was reached between the U.S. Department of Justice and JPMorgan Chase regarding documents filed in bankruptcy cases. If you (or your client) are in an active bankruptcy and you have a mortgage held by JPMorgan Chase, there may be relief heading your way.
JPMorgan Chase was accused of ‘robo-signing’ documents filed in active bankruptcies. Specifically, they were accused of improperly filing a ‘notice of mortgage payment changes’ (NOMPC) in multiple cases. An NOMPC is required to be filed when a monthly mortgage payment changes due to changes in principal, interest or escrow. These documents must be filed at least 21 days prior to the effective date of the change. Further, an NOMPC is to be signed under penalty of perjury by someone with personal knowledge of the facts and figures contained in the NOMPC.
JPMorgan Chase has admitted that over 50,000 NOMPCs were improperly signed by employees that did not properly verify the accuracy of the document. They further admitted over 25,000 NOMPCs were signed by employees of third party companies on matters unrelated to the factual accuracy of the documents.
The terms of the $50 million settlement include that JPMorgan Chase will:
- Provide $22.4 million in credits and forgiveness of second lines for homeowners who received inaccurate NOMPCs.
- Pay $10.8 million to homeowners who had NOMPCs that were not timely filed in their bankruptcy.
- Pay $4.8 million to homeowners in bankruptcy who did not timely receive escrow statements.
- Pay $4.49 million to homeowners in bankruptcy whose mortgage payments were not applied in accordance with the escrow statements.
JPMorgan Chase promises to correct its practices and will be subject to the oversight of a third party company. The settlement does not prevent homeowners in bankruptcy from pursuing any rights they may have to seek relief against JPMorgan Chase as a result of these errors.