By Hon. Judith K. Fitzgerald (Ret.)
Tucker Arensberg, P.C.
Professor of Practice, University of Pittsburgh School of Law
Mortgage insurance can be an expensive proposition
for homeowners at the same time that it provides assurance to lenders. Whether the term of paying insurance premiums
can be extended as the result of a mortgage modification was the topic of the
recent decision by the Court of Appeals for the Third Circuit in Ginnine
Fried v. JP Morgan Chase & Co; JP Morgan Chase Bank NA, d/b/a Chase, ---
F.3d ---- (3d Cir. 2017), 2017 WL 929752 (3d. Cir. Mar. 9, 2017). The case involved a homeowner who sued JP Morgan Chase Bank (“Chase”) for unlawfully extending
the requirement to purchase private mortgage insurance. In reaching its decision, the
Court of Appeals examined the provisions of the Homeowners Protection
Act (“Protection Act”), 12 U.S.C. § 4901 et seq., and concluded that the homeowner was
correct. Writing for the appellate
court, Judge Ambro asked: “Does it [the Protection Act] permit a
servicer to rely on an updated property value, estimated by a broker, to
recalculate the length of a homeowner's mortgage insurance obligation following
a modification or must the ending of that obligation remain tied to the initial
purchase price of the home? We conclude the Protection Act requires the latter.”
Ginnine Fried v. JP Morgan Chase &
Co; JP Morgan Chase Bank NA, d/b/a/ Chase, No. 16-3069, 2017 WL
929752, at *1 (3d Cir. Mar. 9, 2017).