CORRECTION: Santa Clarita Family Claims Home Was Foreclosed Upon Illegally
CORRECTS STATUS OF LAWSUIT, DEFENDANT RESPONSE
About 16 months after Habitat for Humanity volunteers rehabbed his Stevenson Ranch home, a military veteran is suing JP Morgan Chase over what he claims was an illegal foreclosure.
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Tom McDivitts, a 10-year Army veteran and trained nurse, filed suit against JP Morgan Chase after, he says, the bank gave him no opportunity to follow through on a program he signed up for that he thought would help his family keep their home.
The McDivitts worked hard to save the home that the family purchased in 2001, said Mark Young, attorney with Donahoe and Young, the firm representing the McDivitts.
McDivitt said his family had financial trouble after his wife, Stacey, became ill.
“We reached out for help, and had to declare bankruptcy so that we could keep our head above water,” he said.
When he contacted the bank, he began a HAMP program, he said, which he thought would let the family keep their home.
The Home Affordable Modification Program is “part of the Obama Administration's comprehensive plan to stabilize the U.S. housing market by helping homeowners get mortgage relief and avoid foreclosure,” according to the program’s website.
For those in financial trouble, like the McDivitts, the program offers assistance to avoid foreclosure and ways to lower the monthly payments to prevent families from losing their homes.
However, the bank used it to engage in a practice called "dual tracking," according to the lawsuit. This is when a bank works with a customer who is behind on a mortgage while going forward with foreclosure proceedings on the same home.
The practice is considered illegal in California under a bill signed into law by Gov. Jerry Brown in July 2012.
After receiving approval and making payments on the HAMP loan, he was told by Chase to send information and that his second loan would be modified.
The lawsuit alleges that at this point, the McDivitts reached out to JP Morgan Chase, let them know about their situation.
However, 11 days later, his home was foreclosed upon, according to the McDivitts’ attorney.
The financial institution asked for paperwork regarding the HAMP, and while the paperwork was being filed, the lawsuit alleges that a practice called “dual-tracking” was taking place.
“In the meantime, we got a letter posted on our door saying that the loan was sold to a management company and we need to move out in 30 days,” he said.
The HAMP payments were current at the time of the foreclosure, McDivitt said, so the family, which had worked on their home through the Habitat for Heroes program, never had a legitimate chance to follow through on the program they thought would save their home.
In 2012, the McDivitts received help with some painting, carpentry, and general maintenance, as part of the Habitat for Heroes program.
The program, which is also building a groundbreaking, first-of-its-kind housing community in Saugus for veterans, helps veterans transition into home ownership after their service.
A lawyer for Ocwen, one of the defendants, declined to comment.
The bank had not officially been served with the lawsuit, and so the bank did not have an immediate response, according to Suzanne Ryan, a JP Morgan Chase spokeswoman.
The lawsuit seeks a rescission of the “unlawful transaction,” alleged in the lawsuit.
Tom McDivitt said he saw an ABC News report a couple of months ago, which had a segment on Chase and their loan program.
“It mentioned the exact same practice they were doing to us, where they sold off the loan to an investment company, if you’re not current on it, and the investment company foreclosed on the house,” he said. “It was more profitable for them to do that.”
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