JPMorgan Unit’s Unfair Mortgage Fee Class Action Settlement Approved

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In an order filed on Friday, but made public Tuesday, a motion for preliminary approval of a $2.25 million settlement was granted by a federal judge in the class action lawsuit accusing a JPMorgan Chase & Co. subsidiary of unfairly charging mortgage customers late fees even though they had paid their mortgages on time.

The class action lawsuit was initiated in 2011 by New Jersey resident Pedro Pena. The complaint alleged that EMC Mortgage Corp., whose loans were later taken on by JPMorgan Chase & Co. in April of 2011, charged late fees when mortgage holders had older installments due, but had paid one full monthly payment. EMC Mortgage Corp. would allegedly apply the payment to the oldest outstanding installment, rather than to the current mortgage payment due. The practice, Pena alleged, charged mortgage holders twice; once for the older installment, and then again for the new mortgage bill when the funds were applied to the old installment. Pena further argued that this practice violated the New Jersey Home Ownership Act of 2002.

Under the terms of the proposed class action settlement agreement, EMC Mortgage Corp. will pay Class Members a “substantial portion” of the late fees the class action alleges were unfairly charged. JPMorgan Chase & Co. will also be required to waive any allegedly unfairly assessed unpaid late fees. The lead plaintiff’s attorney, Nathan Marc Edelstein, was also appointed Class Counsel under the terms of the JPMorgan class action settlement.

U.S. District Judge Esther Salas stated in his order, “The court preliminarily finds that the settlement agreement resulted from intensive, serious, and noncollusive arm’s length negotiations … [after] thorough and exhaustive discovery and more than two years of active litigation.” Formal mediation began in May 2013, and by August of that year, JPMorgan Chase & Co., EMC Mortgage Corp., and the plaintiffs indicated they had reached a tentative settlement agreement.

Although JPMorgan Chase & Co. and EMC Mortgage Corp. do not admit any liability under the class action settlement agreement, in court documents filed in June they state, “Continued litigation poses risks on both sides, and both sides agree that the proposed settlement is in the best interest of all parties.”

Notice will still need to be provided to all Class Members and should occur within 30 days of Judge Salas’s order preliminarily approving the class action settlement. In addition, a fairness hearing was scheduled for December of this year.

Further information about the JPMorgan unfair mortgage fee settlement was not immediately available. Keep checking TopClassActions.com or sign up for our free newsletter for the latest updates. You can also mark this article as a “Favorite” using your free Top Class Actions account to receive notifications when this article is updated.

The lead plaintiff, Pedro Pena, as well as the members of the Class are represented by Nathan Marc Edelstein of Nathan M. Edelstein PC, and Mark A. Fisher and Arnold Carl Lakind of Szaferman Lakind Blumstein & Blader PC.

The JPMorgan Unfair Mortgage Fee Class Action Lawsuit is Pedro Pena, et al., v. EMC Mortgage Corp., et al., Case No. 2:11-CV-02719, in the U.S. District Court for the District of New Jersey.