For want of a few pieces of paper, Cheyenne DiEnno and David Bjornsson may have just lost about $14,000.
Did Chase Bank lose them, and deserve blame for a loan deal gone awry? Or did Chase try its best, and simply not manage to get everything it needed from the South Jersey couple in time to close their home refinancing in June — two months after they applied, and after mortgage rates had spiked?
Those are key questions raised by a dispute that pits DiEnno and Bjornsson against JPMorgan Chase. The $14,000 might be a drop in the bucket to the nation's number-one megabank, an institution that counts nearly $2 trillion in assets. But it's real money to DiEnno and Bjornsson, who are frustrated and angry enough to complain to anyone who will listen.
"I'm convinced it's a scam," says DiEnno, an artist and writer who has lived in her Lumberton home since 1985. DiEnno believes Chase dragged its feet and then deep-sixed her application for no good reason — or, more to the point, because it could make extra money by doing so.
Although Chase wouldn't discuss details of the case, a spokesman dismissed her accusations.
"We ultimately closed this loan application after extending the rate lock a full month, and after making a number of attempts to secure needed information from the borrower," said Chase Mortgage Banking vice president Jason Lobo.
Who's right? I can't say with 100 percent confidence, even after reviewing dozens of e-mails that DiEnno provided. At the very least, Chase personnel repeatedly sent confusing requests, and then canceled the couple's application with almost no explanation.
But I can tell you that DiEnno has good company in suspecting that basic economics may have played a role — including from such experts such as Jack Guttentag, a professor emeritus of finance at the University of Pennsylvania's Wharton School.
"It's pretty clear that when interest rates are rising, there's more of a tendency for loans to not get cleared within the lock period," says Guttentag, who runs a mortgage-shopping website called "The Mortgage Professor" (www.mtgprofessor.com).
When rates spiked in 2003 — after dropping to near 5 percent, then a 41-year low — Guttentag was flooded with complaints about expiring locks, paired with what he says were "flimsy excuses" from lenders.
Did the same thing happen here? Today's rates make 2003's look astronomic, but there may well be similarities. I'll be curious to hear from readers if others have recently lost mortgage locks.
Much of DiEnno and Bjornsson's account may seem familiar to anyone who's run the gantlet of a recent mortgage application. As lenders have imposed stricter standards in the aftermath of 2008's financial collapse, complaints have surged about seemingly endless requests for documents and verification — including repeated demands for information that borrowers say they've already sent.
Chase actually initiated the couple's story this spring, with an offer they found hard to refuse: a "preapproved" invitation to refinance at historically low rates.
DiEnno once counted herself as mortgage-free. But to repair and improve her property after flood damage from a nearby branch of the Rancocas Creek, she has refinanced twice since 2004. Today, she owes about $217,000 — less than half the home's market value, but enough to benefit.
DiEnno and Bjornsson applied jointly, locking in a 15-year fixed-rate loan at 2.87 percent — near the week's national average, according to HSH Associates.
Rates actually dipped in the first month, but then they began climbing — by half a percentage point when their deal was canceled, and to about 3.60 percent last week, HSH says. If they borrowed at that rate, they'd pay about $14,000 more over the life of a 15-year loan.
DiEnno believes Chase actually had two incentives to drop their application. One was the ability to lend the same money at a higher rate. The other was to keep her paying on the loan she has now: a 30-year, 5-percent mortgage that Chase also holds.
"I provided everything they asked, several times over," DiEnno says. After the deal was canceled, "all they kept saying was, 'We're really sorry about what happened.' "
By my calculation, that and about $14,000 — plus $450 for her nonrefundable application fee — would make her close to even.
Contact Jeff Gelles at 215-854-2776, email@example.com, or @jeffgelles on Twitter. Read his blog at www.inquirer.com/inquiringconsumer