American Home Mortgage Bounces Checks, Blames Chase Bank

It seems that bankrupt mortgage lenders are no different from bankrupt home owners. When they start bouncing checks they blame the bank, and hey, they might even be telling the truth.

From the Associated Press:

American Home Mortgage Investment Corp. bounced 564 property tax checks in Maryland but blamed other financial institutions for the problem, the state’s commissioner of financial regulation said Thursday.

The bankrupt mortgage lender responded Thursday to inquiries made last week by state regulators, saying the problems stemmed from the inadvertent freezing of bank accounts and a previously disclosed dispute with government-sponsored mortgage financier Freddie Mac.

While no one has lost their house yet in this situation, missed tax payments can lead to a tax lien and ultimately foreclosure on a property.

American Home Mortgage claimed JPMorgan Chase inadvertently froze escrow accounts that were supposed to be used to make the property tax payments, Bloom Raskin said. American Home said JPMorgan Chase thought it had an interest in the accounts, but unfroze the accounts when it realized it did not, according to Bloom Raskin.

A spokesman from JPMorgan Chase said the company was looking into the matter.

The accounts in question are protected from bankruptcy because they hold tax money collected by the mortgage servicer. AHM closed in August but continues to service its loans… when Chase allows it to access its accounts.

AHM Deflects Blame on Bounced Checks [AP]

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  1. Alvis says:

    Don’t want to say “I told you so”, but that’s the kind of unplanned-of thing that happens when you get involved in the quagmire of usury. Save first, THEN buy.

  2. Bay State Darren says:

    I don’t understand anything about mortgages, financial institutions, or really monetary sums above fifty bucks. Nevertheless I have a prediction: American Home Mortgage fixes the probelm for itself without accepting any blame, while a bunch of their customers are left up shit’s creek w/o a paddle. Just a wild stab in the dark there, call me crazy [I actually am crazy, but that's beside the point.]

  3. crashman2600 says:

    Actually this made the local paper in the Maryland town I live in. They had 12 checks bounce in the county property office. AHM made good on them within 2 weeks according to a followup article.

  4. GearheadGeek says:

    @Alvis: Umm… if that’s a stab at people who have mortgages, enjoy living in a rental for the next 15 years or so while you save to own. Oh, and you’d best hope your rent doesn’t go up, and property values don’t go up faster than you’re saving.

    It’s possible to borrow a reasonable amount at reasonable rates to buy a reasonable home. I couldn’t rent a comparable property for what I’m paying for my mortgage.

  5. Alvis says:

    @GearheadGeek Well then I sure hope your rates stay constant and your mortage company doesn’t go out of business. Me, I’m enjoying the open market of renting until I can buy a house with an honestly-earned dollar.

  6. SadSam says:

    Yet another reason to pay your own real estate taxes. There is no legal requirement to fork over “escrow” funds to your bank. The banks make millions and millions in interest off these escrow funds.

    I set up my own escrow acccounts (in high yield savings accounts) put aside the correct amount of money each month, when the tax bill comes I pay. Up side – I earn interest on my own money (instead of letting the bank earn that interest) and I make sure my tax bill is paid promptly.

  7. samurailynn says:

    @Alvis: So, you’re planning on paying cash in full when you purchase a house? I would guess you’re either living somewhere where you can currently purchase houses for less than $50,000 or that you’re dreaming a wild dream.

    In other news, it is possible to take out a mortgage at a fixed rate. In fact, I just did it this month – with a low interest rate even (lower than any of the low intro variable rates I’ve heard people brag about).

  8. Buran says:

    If the government tried to take my house over something like this, I’d be in court filing suit against them and against the mortgage company, because it’s not MY problem and they need to sort it out amongst themselves, so fast their heads would spin.

  9. GearheadGeek says:

    @Alvis: I couldn’t care less if my mortgage company goes out of business, I happen to pay my own insurance and taxes. The rate? Fixed. So only property taxes and repairs could offer surprising excess costs, I don’t have to expect increased rent every lease renewal, and even in this cruddy market I could sell my house for more than I owe. Over-generalization is not very accurate, there are lots of different situations out there. Not everyone is in the subprime slump, and not everyone was dumb enough to pay $1M for an 800 sq. ft. bungalow in LA.