Chase ARM Class Action Lawsuit Highlighting Widespread Problem?

A class action lawsuit is pending in California against JPMorgan Chase Bank, N.A. (or Chase Home Finance, LLC.) for the improper setting of loan interest rates. The lawsuit alleges that JPMorgan Chase offered adjustable rate mortgages (“ARMs”) with specific conditions and then improperly set the interest rates on these mortgages. Those affected in this specific lawsuit are those who received Chase loans in California before 2006, but this practice is believed to be far more widespread.

Many clients were charged an initial interest rate higher than the sum of the “margin” and the “index.”

Allegedly, Chase provided documents telling borrowers that their “Initial Interest Rate,” the amount that would be charged before any adjustments, would be a sum of a specified “index” plus a set “margin.” Chase also specified that this initial payment could also be less than that sum. The rate would be based on the weekly average yield on United States Treasury securities adjusted to a constant maturity of 1 year (the economic “index”) plus a “margin.” Later statements claimed that the initial interest rate would not be linked to the index and might be discounted. Despite this, many clients were charged an initial interest rate higher than the sum of the “margin” and the “index.”

Adjustable rate mortgages are a type of home loan that appears to be a good deal initially, but its complicated nature leaves many borrowers with more questions than answers. In this system, banks charge an initial interest rate, which is a set value based on the combination of an index and a margin. The index is either measured by a standardized economic index or, if a bank does not specify an index, they may be able to adjust it on their own. In addition to the index, the initial interest rate is calculated with the bank’s added-on profit, called a margin. Allegedly, in some instances banks have relied on the confusing nature of these loans to charge borrowers an initial interest rate higher than the possible sum of the index and margin. These practices lead to billions of dollars more in profit to financial corporations and significant losses for homeowners.

If you may have had an improperly set interest rate by Chase Bank, you may be eligible for a Chase ARM class action lawsuit. Furthermore, if you believe that any bank has improperly set your loan interest rate, you may be entitled to pursue compensation against your lender for abusive lending practices. Do not hesitate to complete the free consultation form on the right to contact an experienced adjustable rate mortgage attorney.