The plaintiff had had been issued a home mortgage and a home equity line of credit to cover a home purchase. Both loans went into foreclosure after the collapse of the real estate market. The plaintiff alleged that following the foreclosure sale of plaintiff’s property, JP Morgan Chase attempted to collect nearly $250,000 on the home equity line of credit, or HELOC. JP Morgan Chase also reported it negatively on plaintiff’s credit report, despite California statutes that expressly forbid such actions following foreclosure. The decision places an injunction against JP Morgan Chase from neither collecting on a HELOC nor reporting negative information to credit agencies when such action is legally barred by state statute.
The alleged predatory lending practices are often associated with lenders that intentionally deceived borrowers. This was often by taking advantage of the customer’s lack of understanding of the mortgage loan process and their weak financial situation. Aggressive sales and marketing tactics, and deceptive practices often convinced customers to agree to mortgages with abusive or unfair loan terms. Lenders may have pressured homeowners into signing for unneeded home equity lines of credit or unnecessary home improvement loans at high interest rates. Predatory lending practices are illegal in every state and victims are entitled to compensation.
The accountability of lenders will be the next issue of the ongoing mortgage crisis, and the plaintiff will need to prove the violations took place. The mortgage loan process itself will provide the necessary documentation for a homeowner to bring suit against their lender. During the foreclosure process, a mortgage lender must sue to obtain the property from the homeowner, and the homeowner must prove that they were the victim of violations.
The homeowner can use the information found in the promissory note to prove the lender acted illegally. The promissory note and terms of the mortgage will indicate if any violations occurred. The note will have the signature from each party involved. This will show that the homeowner used the same lender to acquire the loan in question.
The above ruling will encourage homeowners who lost their property though foreclosure by JP Morgan and Washington Mutual, to re-examine their promissory notes and mortgage terms. The decision guarantees protection for a homeowner from the questionable actions of a lender. If homeowners can prove that they were victims of predatory lending practices, then lawsuits against mortgage lenders can potentially reach into the millions.