A subprime mortgage lender that lost nearly $400,000 from a refinance gone bad has lost an appeal to recover the money from JPMorgan Chase & Co.’s banking subsidiary.
The case involves a $373,500 residential
loan taken out in 2004 with New Century Mortgage Corp. The borrowers were Sergio Montoya Jr. and Joaquina Montoya.
The loan was subsequently taken over by
JPMorgan Chase Bank, N.A., while the borrower additionally took out a second mortgage in 2005 from Beneficial California Inc.
In 2006, the Montoyas applied with WMC Mortgage LLC for a pair of loans totaling $508,000 loans to refinance
both the first and second mortgages.
Chase issued a payoff statement requiring $389,449 to satisfy the loans.
The refinance transaction closed in March 2006, documents were sent for recording and funds were wired to Chase.
But shortly after the closing, the borrowers decided they wanted to cancel the refinance.
When the escrow agent asked Chase — which had already filed a reconveyance — to return the funds, Chase said it would first require a $750 reinstatement fee, the payments needed to bring the loan current and various documents signed by WMC and the borrowers.
But it wasn’t until April 2013 that WMC — which claims it complied with Chase’s requirements — learned that the funds hadn’t been sent back and were instead used to satisfy Chase’s loan.
So WMC filed an action against Chase in June 2013.
Although the Montoyas were initially listed in WMC’s action, WMC dismissed them.
The trial court concluded that
WMC hadn’t met the statute of limitations to file the lawsuit and ruled in favor of Chase — dismissing the complaint with prejudice.
WMC — which was acquired by General Electric Co. in 2004 and ended operations in 2007 — filed an appeal with the Court of Appeal of the State of California, Third Appellate District.
But on Wednesday, the appeals court filed a ruling in Chase’s favor.
“The judgment is affirmed,” the decision stated. “Chase shall recover its costs on appeal.”
