A proposed class action alleges that JPMorgan Chase Bank and J.P. Morgan Chase Custody Services have failed to timely report when mortgage debts have been discharged in California.
Behind the case, which has been removed to federal court, is a Los Angeles resident who claims the defendants discharged her mortgage obligation yet failed to properly declare that the debt is no longer owed. California law requires that lenders record a deed of reconveyance within 51 days of a debt’s discharge, the suit explains; the defendants, the plaintiff says, did not adhere to this requirement.
As a result, the plaintiff’s creditworthiness has allegedly been damaged by the indication that she still owes the mortgage. Further, the case says that the defendants inappropriately maintain a stake in the property and reserve the ability to recover money that isn’t really owed in the event of a property sale. From the complaint:
“While Defendants have no right to recover the discharged debt, they could still improperly and deceptively request or receive payment, hold up a sale, or prevent Plaintiff and other Class members from seeking more favorable financing of their debts.”