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| JPMorgan Chase & Co. is being sued because it allegedly shut down a self-employed couple’s home-equity line-of-credit even though their income hadn’t changed. Another class action alleges that faulty appraisal values were used in decisions to close HELOCs.
A class action was filed Thursday in U.S. District Court for the Northern District of California against Washington Mutual Bank and parent JPMorgan Chase Bank, N.A., according to a copy of the complaint provided by plaintiffs’ attorneys, KamberEdelson LLC. The defendants are accused of reducing or suspending HELOCs by falsely claiming that borrowers’ incomes had fallen. In addition, according to the plaintiffs, borrowers were not given a two-week notice — as had been promised in writing by the defendants. A Chase spokesman declined to comment on the litigation. Jeffrey and Jenifer Schulken, a Cupertino, Calif., couple who are the lead plaintiffs in the case, originally closed on their $250,000 HELOC in October 2005, the complaint says. They allege that their HELOC was suspended over their inability to repay the loan even though income from the business they own and operate had not changed. The complaint says thousands of HELOC borrowers received letters from Chase as recently as March asking for income documentation within 14 days. But even though the Schulkens provided the requested information within the time allotted, their line was frozen just six days after the letter. The suspension led to a check for a credit card payment being returned for insufficient funds. “Although federal law allows the creditor to freeze or reduce the line where the creditor reasonably believes that the consumer will be unable to make payments as agreed because of a material change in the consumer’s financial circumstances, this exception requires both a material change in a borrower’s financial situation and the creditor’s reasonable belief that the borrower will not be able to repay the HELOC account as agreed.,” the complaint says.The class includes all Chase HELOC borrowers who received the 14-day suspension letter and lost their lines prior to the expiration of the 14-day deadline. The case follows two other class actions recently filed against Chase and WaMu alleging systematic and unlawful actions on HELOCs, a statement from KamberEdelson said. One of those two cases, filed on behalf of Michell Kimball by KamberEdelson, claims Chase closed Kimball’s HELOC over a faulty automated valuation model. The second case was filed by attorney David Parisi on behalf of Michael Walsh, who also claims his line was closed over a faulty AVM. “In addition to challenging the banks’ use of a faulty AVM, the Walsh case further takes issue with the banks’ practice of freezing HELOC accounts based on lower declines in value than those permitted under the federal Truth in Lending Act,” the KamberEdelson statement said. JEFFREY SCHULKEN AND JENIFER SCHULKEN, an individual, on their own behalves and on behalf of all others similarly situated, Plaintiff, v. WASHINGTON MUTUAL BANK, HENDERSON, NEVADA, JPMORGAN CHASE BANK, N.A., Defendants. Kimball v. Washington Mutual Bank, Henderson Nevada et. al. |
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