Roseville, California (PRWEB) October 27, 2011
On Tuesday October 18, 2011, United Foreclosure Attorney Network (UFAN) filed suit in Superior Court in Martinez, CA (case number C-11-02390) on behalf of many home owners against JP Morgan Chase and other individuals alleged by Plaintiffs to be involved in a scheme to defraud and otherwise take advantage of investors and borrowers.

The complaint information how the lending practices of JP Morgan Chase led straight to Plaintiffs becoming placed in harmful and predatory loans. Following a loosening of lending restrictions in the 1980s, banks like JP Morgan Chase started originating exotic non-prime mortgages with adjustable interest rates. These risky loans have been often securitized into mortgage backed securities and sold to investors. Since a bank could quickly recoup amounts spent issuing mortgages by the sale of these residential mortgage backed securities (RMBS), banks incentivized mortgage brokers to participate in the scheme with high fees for origination. According to the filing, these charge incentives encouraged full disregard for underwriting requirements which were employed to lure borrowers into extremely predatory loans they could not afford.

The complaint alleges that Plaintiffs relied on statements produced by JP Morgan Chase personnel and mortgage brokers when they accepted negative loans. Plaintiffs were usually told that they would be in a position to afford high loan amounts and had been promised the capacity to refinance at a later date. It is alleged that in some situations, loan officers blatantly lied to Plaintiffs about the top quality of the loans they had been getting. The complaint alleges that Chase not only knew about these broker practices, but encouraged and incentivized them. A Chase internal memo states, If you do not get Stated/Stated, try resubmitting with slightly greater income. Inch it up $ 500 to see if you can get the findings you want. Do the identical for assets.

Similarly, the complaint alleges that appraisers were encouraged to inflate home values in order to give borrowers greater loan amounts. The greater the loan amount, the more money JP Morgan Chase was capable to make on the sale of the loan. It is argued that the bank incentivized appraisers to falsify property valuations in order to safe a higher loan to sell to investors. The complaint alleges that Plaintiffs borrowed excessively in reliance on inflated appraisals and other statements.

Plaintiffs also argue that simply because of the sale of their loans, they did not receive the advantage of the contract for which they bargained. Plaintiffs, believing they would be placed into a mortgage with a traditional Lender/Borrower relationship, later identified that they did not have a lender with whom they could deal. Servicers are not at liberty to make changes to contracts when circumstances are unforeseeably changed. In addition, loan servers have an incentive to foreclose whereas a lender has the incentive to modify a loan if it would be more lucrative in the extended run. Had several property owners had a lender with whom to deal, they could have restructured the mortgage for a more desirable result for each parties. The complaint information how numerous Plaintiffs diligently sought modification of their loans but have been denied merely because the servicer had no authority to grant a modification.