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May 21, 2015

GOP Lawmaker Questions Charity Donation in Mortgage Deal

A Republican House member is raising objections to a provision of a $50 million settlement for bankrupt homeowners that directs $7.5 million of the fund to a charity run by the American Bankruptcy Institute, reports The Wall Street Journal.

At a Capitol Hill hearing Tuesday, Virginia Rep. Bob Goodlatte said it is inappropriate that some funds from the deal with banking giant JPMorgan Chase "didn't make it to the victims" who weren't properly notified of higher mortgage payments after they filed for bankruptcy.

The settlement with federal regulators arose from accusations leveled against the bank by the Justice Department's U.S. Trustee Program, which oversees bankruptcy courts. Cliff White, the program's director, defended the donation to an affiliate of the institute, a nonprofit trade group for professionals in the bankruptcy industry that runs programs on credit abuse and poor money management. Mr. White said the bankruptcy system was "injured in a direct way" by JPMorgan's actions.

Republican legislators grilled another Justice Department officer Tuesday over more than $100 million in similar donations that were mandated in multibillion-dollar settlements with JPMorgan and other banks over mislabeled mortgage securities.