Chase Bank Fraud? You be the judge!

[Moe Bedard]

Were you an unfordable mortgage by Chase and want to know why? This may be the reason, blame Zippy!

Thus reads an internal memo from Chase obtained that accidentally found its way into the hands of journalist Jeff Manning of The Oregonian. It was the basis for an article titled, Chase mortgage memo pushes 'Cheats & Tricks'.

3 "handy steps" for getting a questionable loan approved by JPM Chase's automatic system:

1. Lump all of an applicant's compensation as the applicant's base income, rather than breaking out commissions, bonuses and tips.

2. Do not disclose use of gifts for down payments.

3. If all else fails, simply inflate the applicant's income. "Inch it up $500 to see if you can get the findings you want. Do the same for assets.

The memo deals specifically with stated-income asset loans (known also, tellingly, as “liar loans”) which Chase no longer offers. It’s still a pretty stunning indication of the origins for subprime lending, however.

More importantly, of course, it’s from a big bank. The policy may not have been official, but it’s certainly one in the eye for Wall Street’s efforts to blame local mortgage lenders for the subprime mess.

This is Calculated Risks take on the memo:

Calculated Risk: More On Chase and the Zippy Tricks

What I really got interested in was not where, exactly, this document came from, but why, precisely, it says what it says. I mean, you can see this as a Chase Account Executive (or whoever authored it) simply baldly encouraging fraudulent misrepresentation, and that of course is what it is. But you also have to see that it does appear to require some misrepresentation to get past Zippy in some respects. That much is to Chase's credit.

This memo has been passed on to SEC officials.

Here is the actual memo from a now FIRED Chase employee:

CHASE - zippy's cheats and tricks

JPMorgan memo shows dirty tricks of mortgage trade | Reuters

JPMorgan memo shows dirty tricks of mortgage trade

JPMorgan argues these were the wayward actions of a rogue employee who has since been fired, and by no means represent company policy.

"Clearly it's nothing that we condone," said Tom Kelly, a spokesman for JPMorgan Chase. "As soon as we learned about it, we stopped it."

Still, in the context of a broader housing debacle, the memo does provide some clues into just what lengths bankers went to push loans through the system.

Were you sold a Zippy mortgage? Maybe this the ammo you need to fight back

[NohelpfromEMC]

Moe,
I am curious as to whether Chase/EMC should have included my commission income when they figured my monthly gross for a modification. I noticed on #1 of the "Handy Steps" that they say to lump all the applicants pay togather with the base pay. My hardship was that my bonus income and commissions were reduced.

I was denied by Chase/ EMC 3 times due to "Hardship Nor Permenent" and 2 times for my income exceeding guidlines. They came up with a monthly income figure about $1000 per month higher than I did which brought me to 31% exactly.

[Moe Bedard]

Do you have all your loan documents? If not, maybe it would be a good idea to get them ASAP and have a look yourself. You never know what was done during the origination or your loan behind closed doors. This Chase Zippy internal memo is "EXACTLY" the kind of proof and shenanigans that these lenders used to make more money per loan and approve more mortgages.

I am not a lawyer and most all of the homeowners here are not either. This is a shame because good and affordable legal representation is what most of you need.

See, this is where it is tough for homeowners who fight with no lawyer or even pro se. If I was representing myself and a foreclosure was filed on me, I would answer and ask for proof that they own the mortgage note and also subpoena all internal records in the origination, selling and servicing of my mortgage.

My days we be spent looking for ways to make money and fighting the banks as I live payment free.

Imagine if 1,000 or 5,000 of you united as one and did this? Wow, talk about sending a message to these guys!!

I would battle them at every step and most the information to do this is readily available now online for you all to do the same or find a lawyer who can fight for you. Yes, this may cost money, but it may be money well spent if the lawyer is worth their salt.

[darlyj]

Moe, how specifically do we ask for proof that they own the mortgage note? Is there a letter template with specific wording for the common folk to use, or do we need a lawyer to draw something official up? Would it need to be notarized? I've heard of people asking to see the original documents with the original signatures, however AZ is a non-judicial state so I don't know if or how that would fly here.

[caldwellb02]

I wonder how many of us here were actually WaMu customers or customers of some other mortgage co. that Chase is now servicing? this Chase fraud applies to Chase-originated loans, as I read it (and quite frankly sounds like what WaMu did to us). If Chase didn't lend the money in the first place, but are now either the new lender or the servicer, what is their culpability in the first fraud?

[Moe Bedard]

They seem to get around this by saying, "I dunno?" or "How were we to know?" and stuff like that.

To me it is like driving someone to the bank, they hold it up, get back in the car and you drive off. Do you think the cops are going to let you get by with, "How was I to know?" Or buying a brand new porche 911 for $2,000. I didn't know it was stolen, yeah, but any reasonable man would have known.

Maybe if there was a large law firm with loads of money it may be quite simple to prove with testimony after testimony (you all) that they "should" know and to claim they do not know that they are servicing tens if not hundreds of thousands of potentially fraudulent loans may be either negligent or just a flat out lie. One or the other.

I am no lawyer, but I have spoken to many that agree or have the same view. They all say yes, but it will take big money and none of them have that kind of capital.

[otisanddinga]

hi moe,

what happened to the ask attorney forum? thanks...

[Moe Bedard]

There were a lot of questions and often no answers. So, I thought it would be best to shut it down.