JPMorgan Chase Bank, N.A.
Paul LLP and Rouse Law, PC recently filed suit against JPMorgan Chase Bank, N.A. in the Southern District of Iowa for unlawfully collecting “post-payment” interest on loans insured by the Federal Housing Administration (“FHA”) without first complying with uniform provisions in the promissory notes and the HUD regulations governing these loans.
Chase, as one of the nation’s largest holders of FHA-insured home loans, has collected millions of dollars in post-payment interest. The National Association of Realtors (“NAR”), estimates that “more than 40 percent of FHA borrowers close during the first 10 days of the month, exposing them to at least 20 days of interest payments after the termination of the mortgage.”
If you took out an FHA mortgage between August 2, 1985 and January 21, 2015, and paid off or refinanced your loan, you may have paid post-payment interest and may be entitled to recoup your losses.
When a customer wants to pay off their loan, either because they sold their house and bought a new house, they want to pay off the mortgage early, or they want to refinance the loan with another company, the customer typically requests a “payoff statement.” According to HUD regulations (the law), the payoff statement must tell the customer that they can pay off the loan on the first day of the month and not pay any interest for that month. It also must disclose that if the customer is paying off the loan on any day other than the first of the month, they may have to pay interest for the entire month, even though they paid it off before the end of the month. Third, the payoff statement must disclose how the post-payment interest is calculated.
Chase uses a standardized form for all customers who request a payoff statement. And Chase does not provide any of these disclosures in that form. The lawsuit says that Chase’s failure to provide the disclosures, and specifically in the form mandated by HUD regulations, is a breach of the contract the customer and Chase entered into (the promissory note). In addition to not providing the disclosures, Chase is collecting interest for the entire month for any payment made on a day other than the first of the month. And our lawsuit says that is not lawful.
You can view the Complaint that was filed in this case by clicking HERE.
We believe this practice is not limited to Chase but is an industry-wide problem and that many banks are collecting post-payment interest unlawfully. For more information on the unlawful post-payment interest practices of banks, click HERE.
You can contact Ashlea Schwarz for more information about the case against Chase Bank or if you believe your bank charged you post-payment interest without the required disclosures. Ashlea is available at firstname.lastname@example.org or 816-984-8105.