Get Your Mortgage Rate Quote in Just 30 Seconds

Mortgage rates change every day, and your rate will vary based on your location, finances, and other factors. Get your FREE customized rate comparison below.

Bad Refinance Costs Subprime Lender Nearly $400k

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.”

Popular posts

7 Refinance Strategies
7 Refinance Strategies

Refinance to a lower interest rate: If interest rates have dropped since you took out your original mortgage, refinancing to a lower rate can help you save money on your monthly payments and reduce the overall cost of your loan. Refinance to a shorter loan term:...

7 Refinance Strategies
Is Refinancing With Your Present Lender Preferable?

Do Not Accept the First Refinancing Offer You Receive Homeowners should not accept the first refinancing rate provided to them. This is particularly important if you are applying with your existing lender. Some mortgage lenders have mechanisms in place that prioritize...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts