Judge Certifies WaMu Chase Home Borrower Class

A federal judge has certified a class action lawsuit filed by a California couple who say Washington Mutual and JPMorgan Chase suspended and reduced credit limits on their home equity credit lines without valid reasons.

Jeffrey and Jenifer Schulken allege in their 2009 class action lawsuit that they received a letter on March 17, 2009 from Chase requesting that they complete and return within 14 days a paystub and IRS tax form verifying their income. That same day, the Schulkens signed the tax form and faxed it back to Chase as instructed. However, two days later, they discovered their HELOC account had a zero available balance and received a letter dated March 18, 2009 – the day after they submitted the tax form – informing them that their home equity credit lines would be suspended because Chase was “unable to verify” their financial condition because the Schulkens did not provide the requested documentation. They incurred fees as a result.

 

The Schulkens contacted Chase’s customer service department and provided additional financial documentation, but were informed their HELOC account would remain suspended because they did not have sufficient income to satisfy their debt obligations. The bank stated the Schulkens’ March 2009 verified income of $5,780 per month was well below the $11,200 stated income on their original application.

The couple claims in the class action lawsuit that the $11,200 monthly income stated by the banks was “inaccurate,” that they had never “provided such an inflated income figure to WaMu, and that if the Schulkens’ file indicated such an income, then WaMu had intentionally misrepresented their income.”

Chase, which acquired Washington Mutual in 2008, tried to dismiss the complaint four times, and the Schulkens amended the complaint five times.
    
U.S. District Judge Lucy Koh partially certified the fifth amended complaint, which sought to represent an “inability to verify” class consisting of borrowers whose home equity credit lines were blocked because they did not provide Chase with tax returns or pay stubs. She also certified a subclass of borrowers whose credit lines were suspended because Chase could not verify their financial circumstances.

Koh amended the plaintiffs’ class definition to include “only those members who signed contracts that (1) arise from heritage WaMu customers, and (2) state that the borrower must provide, upon the lender’s request, ‘a current financial statement, new credit application, or both.'”