JPMorgan Chase Bank, N.A. is on the receiving end of a proposed class action lawsuit in which a New York couple claims the investment firm has unlawfully failed to pay the interest on their mortgage escrow account.
According to the lawsuit, JPMorgan requires every mortgage borrower to deposit money into an escrow account from which the bank directly pays taxes and insurance premiums for the individual’s property. The bank’s mortgage agreements and New York state law, as well as the laws of at least 13 other states, stipulate that since an escrow account contains the borrower’s own funds, the bank is obligated to pay interest on those funds, the suit explains. The New York General Obligation law, which the complaint argues applies to the plaintiffs’ case, requires that “all mortgage investing institutions” pay at least two percent interest on funds in mortgage escrow accounts, the lawsuit says.
Despite these requirements, JPMorgan has allegedly failed to pay any interest on the plaintiffs’ escrow funds since they took out their first mortgage in 2004. The couple argues that the bank has breached state law as well as its own mortgage agreements in failing to pay the money they’re owed.
“As a direct and proximate result of Defendant’s breaches of contract, Plaintiffs and members of the Multi-State Class and New York Subclass have suffered economic injury equal to the interest they were entitled to receive in connection with their escrow accounts,” the complaint alleges.
The lawsuit seeks to cover two proposed classes, a multi-state class and New York subclass, defined below:
“All mortgagors in the states of California, Connecticut, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Oregon, Rhode Island, Utah, Vermont and Wisconsin, who (i) were mortgagors for a mortgage loan owned by Defendant during the Class Period that was secured by property located in those states; (ii) paid monies into an escrow account held by Defendant or its servicing agents or affiliates; and (iii) received from Defendant or its loan servicing agents or affiliates less than the amount of interest owed under the law of the State in which the property was located.
All mortgagors who (i) were mortgagors for a mortgage loan owned by Defendant during the Class Period that was secured by an owner-occupied one-to-six family residence or property owned by a cooperative apartment corporation located in New York; (ii) paid monies into an escrow account held by Defendant or its loan servicing agents or affiliates; and (iii) received from Defendant or its loan servicing agents or affiliates less than the amount of interest required under NY Gen. Oblig. Law §5-601.”
The two proposed classes exclude all mortgage loan customers who are part of the proposed class defined in another lawsuit, styled McShannock v. JP Morgan Chase Bank N.A., that was filed in April 2018.