Chase Hit With $50 Million Settlement Over Robosigned Mortgage Documents

The nation’s biggest banks have already been hit with billions of dollars in settlements over robosigning — the illegal process of signing and filing important mortgage documents without reviewing them for accuracy — so what’s a few million more? Today, the Justice Dept. announced a settlement with JPMorgan Chase that will require the bank to pay more than $50 million in cash, mortgage credits, and loan forgiveness, to over 25,000 currently and recently bankrupt homeowners.

As part of the deal, which requires court approval, Chase acknowledges more than 50,000 bankruptcy court filings that were signed, under penalty of perjury, by people who had not actually reviewed the documents for accuracy.

According to the DOJ, more than 25,000 of these payment change notices were signed with the names of former Chase employees or of employees who had nothing to do with reviewing the accuracy of the filings. The remaining notices were signed by employees of a third-party vendor unrelated to checking the accuracy of these filings.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery in a statement.

The $50+ million breaks down as follows:

• $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases.

• $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners.

• $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements. This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners.

• $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow payments Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners.

• $7.5 million contribution to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program.

Chase also agrees to make internal changes to its technology, policies, and procedures to prevent this from happening again.

An independent private-sector reviewer has been assigned to verify that Chase complies with the settlement order.

The settlement does not prohibit affected homeowners from taking legal actions or seeking additional relief from Chase.

UPDATE: Chase has released the following statement to Consumerist —

Our Payment Change Notices were appropriately reviewed and substantively correct in the overwhelming majority of cases, even though the process for filing them electronically was flawed. We have changed our system to ensure electronic signatures on bankruptcy filings will match the individual who reviewed the filing for accuracy.