The Huffington Post | By Bonnie Kavoussi
Bonnie Kavoussi, Huffington Post
That $2 billion trading debacle isn’t all JPMorgan Chase has to deal with this week.
Allan Danforth of Kansas City claims that he bought a house in a short sale in September 2010 from homeowners whose mortgage was held by JPMorgan, KMBC reports. Then two months later and without warning, JPMorgan foreclosed on the home, changing the locks and taking away his furniture, appliances and family items. Danforth is now suing JPMorgan for trespassing and theft.
Danforth’s suit is likely no more than an afterthought to a bank struggling with a large-scale problem — a $2 billion trading loss that’s injured the company’s reputation and prompted some shareholders to propose CEO Jamie Dimon give up his role as chairman.
Short sales, in which properties are sold for less than the amount owed, have become promoted as an increasingly promising alternative to foreclosure, but Danforth’s experience suggests the process can still leave something to be desired. All together,there were more short sales than foreclosures in January, according to data from Lender Processing Services cited by Bloomberg, and many housing experts viewed that as a promising sign that foreclosure alternatives were being pursued.
In addition, critics allege that banks’ mortgage paperwork has been disorganized — so disorganized, in fact, for banks to be able to acknowledge receiving new paperwork.Foreclosures have subsequently been criticized as at times impersonal and sudden, with little opportunity for borrowers to negotiate with banks.
