JP Morgan is Getting Sued... Some More
Homeowners are suing JP Morgan because they can't tap their equity lines. Apparently no one informed them that there is a "liquidity crisis" (Ben Bernanke). Were they truly informed, they would realize that the banks cannot lend as most are teetering on the edge of insolvency. Besides, the Fed didn't give them a bunch of money so they could lend it out, that would be inflationary. Instead, they just need to appear capitalized long enough for FASB to make up some new rule that fixes things. Duh. No one tip off BIS and we'll be fine.
More lawsuits for JPM:
A new form of lawsuit against mortgage lenders is evolving amid the tight credit environment. Rather than alleging lenders made misleading or predatory loans, consumers are now filing suit over lenders refusing to extend credit.
A Zion, Ill. homeowner, Pascal Majon, is suing JP Morgan Chase (JPM) over alleged fraud to deny homeowners access to funds through their previously approved home equity lines of credit (HELOCs).
The servicing rights of Majon’s mortgage, originated by Washington Mutual Bank, transferred to Chase after it bought WaMu’s banking subsidiaries. Chase then froze Majon’s home equity line of credit, citing a decline in the value of his home.
“In reality, Majon’s home did not decline in value,” according to a press statement out of KamberEdelson, the law firm representing Majon.
The complaint states Chase failed to identify valuation methods or provide the dollar amount of the property’s new value or percent of value decline.
“In an attempt to limit their exposure to the risk of collapse in the United States housing market and rid themselves of less-profitable loans, Defendants have broken contractual promises to their HELOC account holders by reducing or freezing these customers’ credit limits without first reasonably assessing the value of each affected property,” the complaint reads, in part.
While I can't possibly defend JPM, someone needs to inform this dude that the ATM closed a long time ago.
(h/t Some Assembly Required)