Lawsuit targets WAMU, Chase for cutting off credit

A lawsuit claims Seattle's Washington Mutual Bank illegally froze consumer credit despite receiving billions of dollars in bailout money.

One of those consumers is KIRO Radio's own Dori Monson.

Monson said he tried to access his home equity line of credit he hadn't used in more than a year, "I needed to use it in April for a couple of things I was planning to do, and I called up WAMU and they said 'No, your (credit) line has been closed down.'"

The lawsuit filed in California claims WAMU and the bank's new owner JP Morgan Chase used faulty models to intentionally undervalue customer's homes. "Customers had to go and prove that their housing value didn't in fact fall and often had to hire attorneys to try to get credit lines reinstated." said attorney Jay Edelson.

Edelson said banks like WAMU were loaned billions of federal dollars to restore frozen credit markets, "What they told members of Congress was that they were going to use that money to lend money to homeowners and small business owners to get the economy moving again and they've done the opposite."

Edelson is seeking class action status for this lawsuit.

JP Morgan Chase declined to comment.