By Katy Stech
A J.P. Morgan Chase & Co. unit struck a $50 million deal
with regulators who accused the bank of filing "robo-signed"
mortgage documents to bankruptcy courts across the country.
Under the deal with the U.S. Justice Department, JPMorgan Chase
Bank N.A. promised to make to payments to more than 25,000
homeowners, including some who received inaccurate payment-increase
notices during their bankruptcy cases.
The deal came after bank officials were accused filing of tens
of thousands of documents to bankruptcy courts that weren't
actually reviewed by the people who attested to their accuracy.
Specifically, bank officials admitted to filing more than 50,000
payment-change notices that were improperly signed, under penalty
of perjury, by persons who hadn't reviewed the accuracy of the
notices, according to a Justice Department news release that
described the settlement. More than 25,000 notices were signed in
the names of former employees or of employees who had nothing to do
with reviewing the accuracy of the filings, the release added.
"It is shocking that the conduct admitted to by Chase in this
settlement...continued as long as it did," acting Associate
Attorney General Stuart F. Delery said in the release. "Such
unlawful and abusive banking practices can deprive American
homeowners of a fair chance in the bankruptcy system, and we will
not tolerate them."
Bank spokesman Jason Lobo said the company's payment-change
notices were appropriately reviewed "in the overwhelming majority
of cases, even though the process for filing them electronically
was flawed."
"We have changed our system to ensure electronic signatures on
bankruptcy filings will match the individual who reviewed the
filing for accuracy," said Mr. Lobo, who also disputed the
department's characterization of the process as robo-signing.
The payments to homeowners come in the form of cash payments,
mortgage-loan credits and loan forgiveness.
The deal was negotiated by the Justice Department's U.S. Trustee
Program, which monitors bankruptcy cases for wrongdoing.
"This settlement should signal once again to banks and mortgage
servicers that they cannot continue to flout legal requirements,
compromise the integrity of the bankruptcy system and abuse their
customers in financial distress," U.S. Trustee Program Director
Cliff White said.
Write to Katy Stech at katherine.stech@wsj.com
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