JPMorgan Chase Fails to End US Mortgage Modification Lawsuit
* Homeowners claim bank misled them about modifications
* Excess fees, unnecessary foreclosures alleged
* Judge dubs some fee justifications “gibberish”
By Jonathan Stempel
NEW YORK, July 30 (Reuters) – A federal judge rejected JPMorgan Chase & Co’s bid to dismiss a lawsuit accusing it of misleading thousands of cash-strapped homeowners nationwide about modifying their mortgages.
U.S. District Judge Richard Stearns in Boston on Friday let homeowners pursue claims that the largest U.S. bank systematically failed to keep its end of the bargain after signing up borrowers hoping to modify their mortgages under the federal Home Affordable Modification Program, or HAMP.
Stearns also let stand claims that Morgan’s Chase unit drove homeowners deeper into debt by prolonging the modification process through “gross ineptitude,” sometimes adding fees to loans already in default and starting foreclosures while modifications were being negotiated.
“(Some plaintiffs) allege that they would have fared better economically had their homes been foreclosed by Chase at the outset instead of at the end of a drawn-out and ultimately futile modification process that Chase had no real intention of honoring,” Stearns wrote. “These are, of course, allegations — but for present purposes, the court must credit them.”
Copy of the order below…