Just when you think you’ve heard every possible way a bank’s mortgage department can mess things up, the moneylenders come up with a new way to amaze.
For example, one of the country’s largest mortgage lenders, JPMorgan Chase, was in a Long Island courtroom yesterday trying to get the OK to put liens back on about 400 homes it accidentally classified as having satisfied mortgages after the homeowners refinanced their mortgages.
The mistake happened four years ago, according to court papers.
Since 2007, the 400 Suffolk County families could have stopped paying their mortgages, and it appears that Chase wouldn’t have had the right to foreclose. It was an innocent bank error, Chase’s lawyers said.
While not a single homeowner nor Chase appears to have been financially harmed because of the mistake, it highlights the tricky and sticky situation banks find themselves in. Every time a bank executive says he has his arms wrapped around the mortgage morass, new evidence pops up to prove him wrong.
Meanwhile, these same bank executives want investors to believe the worst has passed.
“It’s fairly incredible to me that an error of this magnitude would happen,” said Mark Goldsmith, a lawyer at Jakubowski, Robertson, representing one of the Suffolk County homeowners.
Said another lawyer, David Shaev, who is not involved in the Long Island case, “I’ve never seen anything like this as far as this many accidental [mortgage] satisfactions.”
JPMorgan Chase officials declined to comment.
One affected homeowner, David Wolmetz, said that he refinanced his mortgage back in the mid-2000s and recalls soon afterward receiving a letter from the bank informing him of the mishap with the lien.
All of the mistaken “satisfactions” were a result of refinances that somehow went wrong, and the homeowner was otherwise in good standing.
The law firm handling Chase’s Suffolk case is Steven J. Baum PC, which is reportedly being investigated by federal and state authorities for its alleged shoddy case work.
Indeed, the nation’s five largest mortgage servicers, including Bank of America, Citigroup, Ally Financial, Wells Fargo and JPMorgan, are facing as much as $25 billion in penalties and fines related to the robo-signing and lost-document fiasco that has slammed the nation’s housing market.
In addition, Chase recently admitted that it foreclosed on active-duty servicemen in violation of foreclosure rules. The bank agreed to pay tens of millions in cash to thousands of active-duty military personnel who were mistakenly overcharged on their mortgages or were wrongfully kicked out of their homes.
“It’s really symptomatic of a [mortgage] processing system that’s broken,” Shaev said.
JPMorgan Chase CEO Jamie Dimon recently described the mortgage mess as “an unmitigated disaster.” mark.decambre@nypost.com