According to lawsuits filed by investor Larry Schneider, the bank sold him thousands of mortgages—then changed the terms of the deal.
Today we published a story about how JPMorgan Chase used other people’s money to pay off penalties assessed for the mortgage-related fraud that contributed to the 2008 financial crisis. The bank forgave numerous loans that it had sold years earlier, and then used those cancellations to receive credit under a pair of settlements with state and federal prosecutors. (JPMorgan declined to comment on this story.)
The revelation comes out of two lawsuits filed by one of the purchasers of JPMorgan Chase’s loans, Larry Schneider, an investor from Boca Raton, Florida. And the narrative Schneider offers for how he wound up in this fight, if accurate, provides a new window into how Chase treats the people it does business with. The first-person account calls to mind Bernie Sanders’s famous assertion that “the business model of Wall Street is fraud.”
Initially, Schneider had a decent relationship with JPMorgan Chase. From 2003 to 2008, S&A Capital Partners, one of Schneider’s three companies, bought 531 mortgages from Chase for less than face value. Schneider then worked out new repayment terms, allowing borrowers to stay in their homes. By being flexible and dealing with homeowners directly, Schneider was able to create a business that worked for him—and his clients. “We ask borrowers what day of the month they’re able to make a payment,” he said in an interview. “We’re able to create stability for the borrower and help their credit.”