How Chase Ruined Lives of People Who Paid Off Their Mortgages

naked capitalism

Friday, August 26, 2011

Matt Taibbi, in giving a well deserved thrashing to the banking industry’s Tokyo Rose, aka New York Fed director Kathryn Wylde, said:

[S]tealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money.

Once you read the allegations in the cases included in this post, I strongly suspect you will agree that the “ruining lives” in the headline is not an exaggeration. And as important, these two cases, with very similar fact sets, also suggest that these abuses are not mere “mistakes”. These are clearly well established practices that Chase can’t be bothered to clean up, since cleaning them up costs money and letting them continue is more profitable.

Both cases took place in Alabama. In both cases, the borrowers had made every mortgage payment on time. One was a couple with three children, the Barnetts. The second is a widow, Besty Barlow, but her husband was still alive when this ugly saga started.

In both cases, the house burned down, The borrowers both had homeowners’ insurance. In the case of the Barnetts, they promptly notified Chase, their servicer, and made one mortgage payment post the fire. Both the homeowners and the insurer, State Farm, called Chase to get a ten day payoff amount. They were told not to make the next payment, since it would be included in the payoff amount. State Farm sent as check as instructed, asked that the mortgage be paid off, and Chase cashed the check.

But Chase did not pay off the mortgage. It put the funds in a suspense account The Barnetts found out the mortgage had not been paid off on their own, and called Chase to get the matter corrected. Chase then proceeded to harass the Barnetts for payment, calling at home and at work. Chase then ‘fessed up that they had the money, and asked the wife, April, to send a fax instructing them to make the payoff. They didn’t, called to pressure her again, and claimed they never got the fax. April repeated the process as instructed a second time (to a different number).

Chase continued to call demanding payment and then sent a letter stating that Fannie had refused the payoff due to “past due” amounts. Chase wanted an additional $8000, which consisted of fees that were not warranted and were due solely to the failure to pay off the mortgage with the money they had.

Around this time, April, who was over four months pregnant, miscarried, and she believes the miscarriage was as a result of the stress created by Chase. And this is far from the end of the mess: the “foreclosure” was reported to the credit bureaus, which meant the Barnetts, who have three children, which has thrown a big wrench into their efforts to get back on a normal footing (more ugly details in the filing).

Barnett v. Chase Home Loan Servicing

The Barlow case is just as ugly. Here, Chase refused to give a payoff amount, both to the adjustor and later to the Barlow’s counsel. Chase instructed the Barlows not to make a June 2010 payment and next month started harassing the Barlows, calling as many as six times a day. They continued to makes these calls even when told to stop, which is a violation of the Fair Debt Collection Practices Act. The Barlows finally got a payoff amount, the insurer sent a check for more than the amount due, and Chase rejected the payment (both via check and via the online payment system). When they finally accepted the payment, they put it in a suspense account and continued their demands for payment and threats to foreclose. A local law firm initiated foreclosure proceedings, which included running an ad in the local papers, which was humiliating. Chase reported the foreclosure to credit bureaus, which led banks to close nearly all of Mrs. Barlow’s credit cards. Mr. Barlow died of a heart attack. Even though the widow retained counsel and the local law firm said the foreclosure had been cancelled, the debt collectors continued to call Mrs. Barlow about her mortgage even though Chase knew she was represented by counsel. And to add insult to injury, Chase has force-place insurance of $2,317 on her vacant lot and wants to be paid for it too.

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