According to the DOJ's
press release, JP Morgan Chase has agreed to a $50 million settlement with the U.S.
Trustee Program. As part of the settlement Chase admitted that it filed
over 50,000 documents that were improperly signed. Improperly signed is
a polite way of saying "robosigned."
Quite simply, Chase was filing affidavits and other documents where the
individual signing had not reviewed the documents prior to signing. At
least half of the documents were signed with the names of former Chase
employees. Moreover, Chase filed these documents
acknowledging that it had engaged in improper mortgage servicing practices.
Even though this is a great moment for consumer advocates (it's nice
to be told that you were right), some aspects of the settlement seem more
like a slap on the wrist than a truly punitive measure.
For example, $22.4 million will be in the form of credits and second loan
forgiveness. "Second loans" are generally junior mortgages on
houses. For the most part, these homes are underwater. Chase was never
going to collect a dime on those second mortgages. Forgiving the balance
is an illusory benefit--those forgiven loans are now taxable income for
Chase already viewed those loans as a loss. Allowing it to credit them
towards the settlement means that Chase isn't truly paying a penalty.
That said, $10.8 million will be returned to homeowners who were harmed
by payment increases that took place during their bankruptcies.
This is a step in the right direction, but given that Chase has admitted
to wrongdoing in the past, and has continued to do wrong, this settlement
doesn't seem strong enough.