Another Slap on Wrist for JPM

Posted by kevin on March 6, 2015 under Foreclosure Blog | Comments are off for this article

Various sources including Mortgage Servicing News carried story that DOJ is settling claims brought by US Trustees that JP Morgan-Chase engaged in wide spread robo-signing after the 25 billion dollar settlement. The penalty to JPMC is $50.4 million.

Under the Bankruptcy Code, the US Attorney is an arm of the Justice Department and is responsible for the administration and overview of bankruptcy cases. The investigation focused on the period from late 2011 until late 2013 and involved about 50,000 notices of payment change and 30,000 escrow notices. JPM-Chase, according to the articles, admitted that it utilized a third party vendor to sign documents, however, claimed that the information contained in those documents was verified by JPM-Chase employees and was accurate. Query: If verified by employees, then why didn’t those employees sign off on the document in question?

Who gets what, though? $22.4 million goes to credits against or forgiveness of second mortgages owed by approximately 400 borrowers. On a per borrower basis, this portion of the settlement comes out to about 56K per borrower. Of course, if the property is underwater, JPMC gets credit for $56,000 on a second mortgage for which it was going to receive $0.

$10.8 Million goes to 12,000 homeowners whose escrow balances were incorrect. $9.7 million to 18,000 homeowners ($540 per borrower) who never received escrow statements or whose escrow payments were misapplied. Finally, $7.5 million went to the American Bankruptcy Institute to provide training to lawyers and education to the public.

This is at least the third time that JPMC has received a multi-million dollar penalty for not following the law. They were a party to the $25 billion DOJ settlement. Then, in late 2013, JPM Chase paid another $13 billion in settlement of claims by the DOJ that they defrauded Investors. This last settlement was small in comparison to the other settlements, and may portend a future where JPMC buys off small governmental claims as a cost of doing business.