JPMorgan Chase Not Pursuing Charges For Mortgage Fraud

Steve Dibert, MFI-Miami

Call me a cynic or maybe it’s just because I know more about the mortgage industry than most people but something doesn’t add up about the story that appeared the local news in Naples yesterday.  It was about Collier County Sheriff’s Deputy, Michael Kovar being terminated for lying about his income on a mortgage application he filled out back in 2007 for a house he wanted to buy and flip.  He claimed his income from his side business of flipping homes was an additional $510,000 a year when in reality it  was $88,000. The house later went into default with a $500,000 deficiency.  After the foreclosure process was completed, JPMorgan Chase stated they were not going to pursue the deficiency.

Soon after, the Collier County Sheriff’s Department began digging through Michael Kovar’s finances for an undisclosed reason and discovered his mortgage application and in March of this year Kovar for “unlawful or improper conduct” and “failing to pay just debts.”

Now don’t get me wrong, I’m not condoning Michael Kovar for misrepresenting his income on his mortgage application and he should be punished.  However, unlike most cases where homeowners get caught misrepresenting their income, lenders are more than eager to convict but in this case especially on a loan this size but JPMorgan Chase refuses to. Why?

According to WINK News, JPMorgan Chase took a $500,000 loss on the property but did they?  It may appear that way on the public record but as anyone who follows my blogs knows,  looks can be deceiving.  JPMorgan Chases says they’re not pursuing Michael Kovar for the deficiency. Did they really take a $500,000 loss on the file?  Probably not.   There are two probable reasons why Chase isn’t pursuing this.  The loan was insured and JPMorgan Chase got paid off by the insurance policy or they felt that if the matter was litigated they couldn’t prove enough of an ownership interest in the note and/or mortgage under Florida law to legally foreclose.  So that begs the question, is this debt legitimate?

The Collier County Sheriff’s office is sophisticated enough to know this.  Michael Kovar’s termination sounds more like a case of the department wanting to terminate his employment using this as an excuse.