JP Morgan Chase Plays Fast and Dirty in Florida Loan Mod Waiver

I’ve harbored the sneaking suspicion that JP Morgan Chase is the worst behaved of the big US retail banks, based on a couple of experiences with them a bit more than two years ago. Not to bore readers with details, but basically, bank staff lied to me persistently regarding the terms of various products. Of course, the real terms, spelled out in difficult to decipher language in itty bitty print in a very long document, were far more unfavorable to me. It was only a credit card and a supposedly fee free checking account, both of which I promptly closed, so all I suffered was a teeny bit of inconvenience and the annoyance of being had. But if a fairly finance savvy person like me can be fooled by Chase, image the field day it has with normal marks.

Further confirmation of Chase’s duplicity comes via an e-mail from Lisa Epstein, who runs in Florida. If I’ve parsed this document correctly (and lawyers are welcome to opine), it’s a doozy (you can download it from ScribD if you prefer).

JP Morgan Chase Foreclosure Waiver and Release Redacted

The critical bit starts in the third paragraph. There JP Morgan Chase points out that it is becoming more common in Florida for judges to require the bank to take action, meaning file a motion, which then leads to a hearing and and order of cancellation, to stop a foreclosure. It also points out that this is a change. In the past, If the bank merely failed to appear at a judicial sale, most courts would cancel it.

Now here’s the sneaky bit. JP Morgan Chase never bothers to say that it regards filing that motion and going to the trouble of attending a hearing is just too much cost and bother to stop foreclosure action when it has started loan mod negotiations. And to add insult to injury, its sneaky wording makes it sound as if it lacks the power to halt the foreclosure process, as opposed to incur more costs (boldface ours):

Because Chase, as a plaintiff or servicer of your loan, is no longer able to unilaterally cancel a judicial sale in many Courts in the State of Florida….

In other words, JP Morgan Chase offers an irrelevant excuse as a pretext for the borrower to make an astonishing concession:

I/we the undersigned Borrower(s), understand and agree that any and all loss mitigation agreements entered into with Chase……..that requires the cancellation of a judicial sale, shall be made expressly conditional upon the Court rendering a valid and final Order cancelling the judicial sale….any and all loss mitigation agreements shall be deemed null, void, and of no further force and effect…..Chase, as plaintiff or as the servicer of your loan, may proceed with the lawsuit to foreclosure your mortgage, including, without limitation, the upholding of any judicial sale and the issuance of certificate of title, as if no loss mitigation agreement was entered into…

So effectively, what the borrower has agreed to is for JP Morgan Chase to proceed with the foreclosure and to waive all rights to using the existence of a loss mitigation negotiation, or even a signed loss mitigation agreement, as a reason for stopping the foreclosure action. The letter has a faux borrower friendly sixth paragraph, that it “may” attempt to cancel a foreclosure sale, but there is no obligation.

Its true stance is blindingly obvious in the first two paragraphs on the second page. In the first paragraph, it
says that all signed loss mitigation agreements will have a paragraph added that the judicial sale has to be canceled for the loss mitigation agreement to be valid, and in the off chance all this isn’t clear, this little two page letter, which gets JP Morgan Chase off the hook as far as doing anything to stop the foreclosure sale, and further asking the chump borrower to waive any rights he might have to protest, controls.

To put it even more bluntly, this has all the appearances that Chase wants to foreclose, and is pressing borrowers to agree to terms that guarantee that loss mitigation negotiations have no force if a foreclosure action is underway.

This document is consistent with complaints we reported on earlier from Florida’s rocket docket, that foreclosures were finalized even when borrowers protested to the court that they were in loan modification programs. This is yet another example of how the banks are gaming the latest loan modification program, HAMP. Servicers collect fees for foreclosures and have the opportunity to apply the proceeds to the principal and interest advances they have made to investors. Those incentive far outweigh the puny fees the Treasury pays them to mod, but hey, if they can have both and placate Treasury by going through the motions of doing loan mods, why not?

Now some readers may argue that this is a cover your ass letter, but I don’t buy that. The language is sweeping and absolute. One rule in negotiations is never make a free concession (as in give something up without getting something back) and the concession that Chase demands is huge. A more reasonable document would have concessions to the borrower, like a requirement that Chase would make good faith efforts to halt any foreclosure, with a caveat that it could not guarantee outcomes. A carve out that Chase demonstrate, if pressed, that it had taken reasonable steps consistent with following through with the loan modification effort would make this a relatively fair agreement. But JP Morgan Chase is clearly not in the business of being fair.

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  1. Conscience of a Conservative

    Bottom Line.
    If you are a party to a foreclosure, you must have a lawyer. The banks are taking advantage of the fact that delinquent borrowers may be cutting corners with regards to obtaining the proper legal advice.

    1. Lee

      Yeah, as if folks going through foreclosure can typically afford lawyers? I hired a couple myself for amounts of money I could ill afford and they provided me with definite maybes on crucial issues such as whether my mortgage was recourse or non-recourse and as to the vulnerability to deficiency judgment of my remaining assets. More clarity would have cost me even more money, I suppose.

      1. Dave of Maryland

        Lawyers specialize. If the one you’re planning to hire can’t give you simple, direct answers (well, within reason), can’t tell you about previous cases he’s handled – and their outcomes, then you’re talking to the wrong guy. Go talk to another.

        All attorneys were not created equal. A good attorney will tell you of cases he’s settled out of court, as that’s where all the wrangling really goes on.

        There was a big long post a couple of weeks ago, about a newly-minted Pakistani-American attorney whose first case was a foreclosure. In this case, not knowing any better & wanting to please his client & earn his first fee, he did pretty much all the right stuff – and won. Much to his amazement.

        The law is all about knowing how to bluff. Good poker players make good attorneys. The TBTFs have been bluffing forever. Imagine overweight semi-senile middle aged men with no clothes on except the faded crown on their heads, railing against the wind.

  2. attempter

    That’s the Morgan Mafia indeed. It’s not some cool nickname. That’s really what they are. And they’ll just get worse for as long as we tolerate their existence.

    I hope that one lesson surely most people must have learned by now is not to agree to anything the banksters propose unless it’s absolutely clear cut and you know exactly what you’re getting in return.

    Even then, the housedebtors really need to stop paying the big banks at all.

    1. Jack Bankvorkian

      They not only say what they want, they get away with it. More importantly, they write lies in courts, which because of their “special rights” they appear to haven been getting away with. You know, that other American dream, the one where we have one set of laws for royalty, another for the peasants.

    2. Francois T

      “Surely they can say whatever they want?”

      Surely, We, The People, can do whatever we want with the banks. After all, they’re creatures and wards of the State.

      Perhaps it’s time to remind them to those REMFs, no?

  3. Flimsy Foundation

    If anyone has been house shopping in recent years, particularly in the less wealthy parts o’ town – it’s likely you’ve come across houses that have foreclosure in their history. Some homeowners, out of rage, will start to destroy walls, fixtures, kitchen cabinets and so forth. An Ohio deletante leveled his castle with a bulldozer after admitting defeat. Other then catharsis, this isn’t something any squatter should consider. Who knows though, some blokes may try to get their nests condemned prior to eviction, just out of spite. I’m sure the neighbors would be just thrilled at the sight of the unhinged wailing away with an 18lb sledge.

  4. LeeAnne

    As I looked around my home town of Manhattan in New York City the last couple of years and witnessed the relentless takeover of prime corner locations and ubiquitous JPMorgan Chase corner signage over huge mainly empty spaces that have replaced what was left of our traditionally privately owned neighborhood retail and restaurant spaces, and wondered how and what, expanding their retail banking as they appeared to be doing during the initial phase of the banking crisis, they knew that we, the people, didn’t know about the future. What was it they, JPMORGAN CHASE were planning for on such a huge scale?

    That is now knowable by anyone paying attention. And that is that they, JPMORGAN CHASE have control of THE LAW. That JPMORGAN CHASE is nothing other than the primary agent of the US centralized governing system; free to do to American consumers anything they wish, and what they wish to do is to continue the debt slavery of the American people with their blood sucking parasitic operations against the people of the western and Japanese world.

    They have known what others could not conceive of; that THE LAW of the USA could be changed on a dime to suit JPMORGAN CHASE BANK as witness the FORECLOSURE LAW secretly passed by both the House and the Senate and put on Obama’s desk in record time to be pocketed by him for signing or veto at the right moment on SIGNAL by TPTB before or after the election or other events unforseeable and unknowable by anyone other than the SHADOW BANKING SYSTEM under the control of the US SHADOW GOVERNMENT/CIA.

    Yes, Virginia, it is that spooky.

  5. LeeAnne

    … and what they wish to do is to continue the debt slavery of the American people with their blood sucking parasitic operations against the people of the western and Japanese world

    ….while keeping the investor class happy and under control by enhancing the accounts of their 27,000,000 retail clients with insider information and manipulated markets like gold and silver metals, commodities, bond and stock prices.

  6. AndyC

    Are potential gains via CDS, CDO’s, synthetics, on MBS now outweighing losses on the mortgages themselves in the decision making?

    Initially it looked like they did not want to do mods or foreclose to avoid more losses now I’m wondering if they actually want foreclosures to proceed so that they can collect on CDS?

  7. tyaresun

    J P Morgan Chase bad. Very very bad. Suggestion. Have two cards with each bank. If they fuck you on one card, fuck them back on the other card.

  8. dejavuagain

    This is a good example of what the State Attorney Generals should do – i.e, go into court and obtain an injunction against JPM or any other lender asking a borrower to sign such a letter, and to declare such waivers to be void on the basis of fraud and public policy.

    Ih the old days when banks and consumer lenders were regulated, this is what would have been done.

  9. Dave of Maryland

    Personally, I’m terrified of doing a loan mod. I have two reasons:

    One, I’m afraid the bank will sneak some language into it that they will use to hang me later. Yves’ post on JP Morgan (my servicer, as it happens) being a good example.

    Second, there is nothing to stop the bank from re-securitizing the mortgage all over again. Which won’t be any better done than the earlier ones, except that sneaky language will deprive me of any rights in court. In other words, if I’m screwed on my mortgage now, I’ll be more screwed with a mod.

    I think it through & keep coming back to the same conclusion: You can’t play cards with a cheat, unless you’re a better cheat than he is. And I’m just not in that league.

    So the solution is to get out of the game altogether, since it’s rigged. Where’s the note? Empowered homeowners might just be the solution.

    I’m actually encouraged the banks are blowing this all off. The longer they do that, the more likely they are to be wrong-footed & bushwacked by what they didn’t see coming. We are waiting for the sound of the next shoe to hit the pavement.

  10. Justicia

    JPM Chase isn’t the only bank playing this game:

    Washington Post

    Amid mortgage mess, owners are blindsided
    By Dina ElBoghdady
    Saturday, October 30, 2010; A01,A12

    After Valarie Stovall fell behind on the mortgage on her home near Hagerstown, her lender agreed in April to slash her monthly payment by $300, and she immediately started paying the reduced amount.

    That’s why, Stovall said, she thought nothing of the yellow flier she ripped off her screen door as she returned from the grocery store one afternoon last July.

    “Then I read it and went ‘Oh my God,'” she said. “It was a notice of eviction.”

    Across the country, struggling homeowners are increasingly tripped up by mortgage lenders that press ahead with foreclosures regardless of any effort they make to provide borrowers with relief on unaffordable mortgages.

    Amid the worst housing crisis since the Great Depression, mortgage companies have established a dual-track approach toward troubled homeowners, negotiating with them over loan modifications while trying to seize their homes.


    1. Yves Smith Post author

      Links in the post (one to a post on the latest SIGTARP report, the other to a post on the Florida kangaroo courts) include widespread reports of loan mod talks not merely not stopping foreclosures, but actually producing one.

      But this JPM letter is worse, it shows a conscious effort to facilitate foreclosure by having the borrower waive whatever rights he might have by having a signed loss mitigation agreement.

      1. Dave of Maryland

        It’s just me, but I have a sneaking suspicion that some houses are being foreclosed on, houses that have no mortgage, houses where the mortgage belongs to someone else, etc., as a personal vendetta against the homeowner, or because someone with the servicer wants the house for their own purposes.

        It’s a nasty thought, but if papers can be falsified wholesale, what could possibly stop it from happening?

        It would be interesting to see who ends up owning the foreclosed properties, what relation they have to the servicer. Because mass evictions in a market already flooded with property with steadily falling prices just doesn’t make any sense. The only way the foreclosure crisis makes sense is if these houses are being flipped wholesale, but away from public scrutiny. Or am I being paranoid?

  11. Chilled Revenge Dish

    Hopefully Doug Gansler (MD AG) will be the knight that slayeth Sun Trust, et al. There have been a few steps to help victims in MD.
    Mediation, and the debt collection goons must personally serve the people they are torturing, passed this July.

  12. diddywadiddy

    We naively applied for a loan mod due to job loss caused by the financial crisis. Going in we had _excellent_ credit and all payments current. Now, having been left hanging through 15 months including 8 trial payments we are facing a catastrophic denial based on supposedly having equity, the NPV test, which can be manipulated by the banks, and should have already been run by the guidelines. It is catastrophic because now our credit is ruined by the trial payments reporting, and all time has been consumed in the intentionally delayed process making other options or a sale impossible. We possibly could have refinanced into the all time low rates, but not now, with ruined credit and no time remaining.

  13. krick

    Is it possible to pay cash for a house and eliminate the banks entirely from the equation? I’ve been saving for a long time for my first house (I currently rent) and I’ve been thinking about putting down 40% on a house whenever this housing mess hits bottom. In light of all the recent horror stories, I’m thinking about saving a few more years and buying a much smaller house so that I can pay cash to avoid a mortgage completely. Am I insane? I’d just rather not be in a contract with these criminals.

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