Illinois Homeowner Files Class Action Suit Against JP Morgan Chase

From HousingWire.com:

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: 43.66 +2.92%) 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 key point of the complaint are that credit was reduced in an illegal, fraudulent and unfair way because WaMU (later JP Morgan Chase) reduced or canceled credit lines without giving appropriate reasons, claimed a factual basis for reductions when indeed there was none.

Especially interesting is the TARP dimension mentioned in points 8 to 10 ın the complaint.

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