We knew the lenders would do this to the wrong person and the lawsuits would start. Well the Hartford Courant and Chase found just the person - Gary S. Klein Mr. Klein is rightfully standing up for himself and the contract he signed. The Courant article is titled Chase Hid Key Reason It Cut Homeowner's Credit Line. Let's take a look at the article -
The fact that Chase Home Equity cut Gary S. Klein's $334,000 home equity credit line by about half is not all that unusual. Banks that last year were begging people to borrow are now backpedaling, trying to reduce their risks.So the bank reduced the credit lines and then lied about why to their customers. That already seems huge. The lie was so blatant that Mr. Klein was able to figure out what really happened. When he went elsewhere they demanded the early termination penalty. This demand for $400 now probably seems like a very stupid and costly decision. It was not until after the complaint was filed and a lawsuit threatened that Chase waived the fees. Very, very bad decision by Chase. Here is a bit more from the article -
But what is unusual is that Chase tried to mislead the Stamford attorney into believing that the reason his credit line was being reduced was solely that it believed the value of his home had dropped.
The other substantial reason was that Chase had changed the formula it used to determine the maximum amount of money it would loan an individual and did not want to tell its customers.
And when an angry Klein went to another bank for a credit line and sought to terminate his account with Chase, the bank demanded that he pay the $400 penalty for early termination.
It was only after Klein filed a complaint with the state Department of Banking and threatened a lawsuit that Chase waived its penalty charge.
Klein and some other attorneys believe that the reason Chase did not want to alert customers about the change in its loan-to-value formula is because unilaterally changing the terms of the credit agreement might violate federal banking regulations and would prevent Chase from collecting the $400 early termination fees from disgruntled customers.Chase is being very short sighted in this case. We know the lawsuits are coming. The first one will make national, headline news. People will associate that with the bank. The damage to Chase will be huge. Much more than the $400 dollars they are trying to collect.
Seth Klein, a Hartford consumer attorney, said he has other clients also facing early termination penalties from Chase and is helping them contest the charges.
Klein said his firm may take Chase to court and seek a class-action suit.