A federal judge in the Northern District of California certified a class led by a Cupertino 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 sued Washington Mutual Bank and JPMorgan Chase in 2009, alleging Truth in Lending Act violations, unfair competition and other claims.
The Schulkens say Chase informed them by letter that their home equity credit lines would be suspended because they did not have enough monthly income to satisfy debts.
The couple say 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.
The fifth amended complaint sought to certify two classes of borrowers, an “inability to verify” class and a “stated income” class.
The “inability to verify” class would be borrowers whose home equity credit lines were blocked because they did not provide Chase with tax returns or pay stubs; the “stated income” class would be borrowers whose credit lines were blocked because Chase found a “material adverse change in their finances.”
U.S. District Judge Lucy Koh partly certified the action in a 23-page order. Judge Koh certified the “inability to verify” class, and a subclass of borrowers whose credit lines were suspended because Chase could not verify their financial circumstances.
Judge 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.'”
