[Correction 1: An earlier version of this article refers to JPMorgan's misfiling of mortgages as a form of "fraud." This term is an inaccurate explanation and the article is now corrected.]

[Update 1: Updated with a statement from JPMorgan Chase.]

JPMorgan Chase (JPM) admitted to misfiling more than 50,000 payment change notices in bankruptcy courts that were “improperly signed, under penalty of perjury, by persons who had not reviewed the accuracy of the notices,” and will pay more than $50 million to homeowners as part of a settlement with the U.S. Department of Justice over its mortgage practices.

The DOJ announced Tuesday that it reached a settlement agreement with Chase, under which Chase admits that more than 25,000 of the 50,000 notices were signed in the names of former employees or of employees who had nothing to do with reviewing the accuracy of the filings.

The rest of the notices were signed by individuals employed by a third party vendor on matters unrelated to checking the accuracy of the filings, the DOJ also said.

“It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart Delery.

“Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

JPMorgan Chase responded to the DOJ's statement announcing the settlement and took issue with the DOJ's choice of phrase.

Under the terms of the settlement agreement, Chase will pay more than $50 million to more than 25,000 homeowners who are currently or previously were in bankruptcy. The payments will be made in the form of cash payments, mortgage loan credits and loan forgiveness, including:

• $22.4 million in credits and second lien forgiveness to about 400 homeowners who received inaccurate payment increase notices during their bankruptcy cases

• $10.8 million to more than 12,000 homeowners in bankruptcy through credits or refunds for payment increases or decreases that were not timely filed in bankruptcy court and noticed to the homeowners

• $4.8 million to more than 18,000 homeowners who did not receive accurate and timely escrow statements. This includes credits for taxes and insurance owed by the homeowners and paid by Chase during periods covered by escrow statements that were not timely filed and transmitted to homeowners

• $4.9 million, through payment of approximately $600 per loan, to more than 8,000 homeowners whose escrow Chase may have applied in a manner inconsistent with escrow statements it provided to the homeowners

• $7.5 million to the American Bankruptcy Institute’s endowment for financial education and support for the Credit Abuse Resistance Education Program

Chase also acknowledged that it failed to file timely, accurate notices of mortgage payment changes and failed to provide timely, accurate escrow statements to customers.

“This settlement should signal once again to banks and mortgage servicers that they cannot continue to flout legal requirements, compromise the integrity of the bankruptcy system and abuse their customers in financial distress,” said Director Cliff White of the U.S. Trustee Program. “It should be acknowledged that Chase responded to the U.S. Trustee’s court actions by conducting an internal investigation and taking steps to mitigate harm to homeowners.”

Under the terms of the settlement, Chase also agreed to make “necessary changes to its technology, policies, procedures, internal controls and other oversight systems to ensure that the problems identified in the settlement do not recur.”

Additionally, an independent compliance reviewer will oversee Chase’s operations to ensure the bank fulfills the requirements of the settlement.

According to the DOJ, Amy Walsh, a partner with the law firm Morvillo, has been selected to serve as the independent compliance reviewer.

“Years after uncovering improper mortgage servicing practices and entering into court-ordered settlements to fix flawed systems, it is deeply disturbing that a major bank would still make improper court filings and fail to provide adequate and timely notices to homeowners about payments due,” White added. “Other servicers should take note that the U.S. Trustee Program will continue to police their practices and will work to ensure that those who do not comply with bankruptcy law protections for homeowners will pay a price, just as Chase has done in this matter.”