Tag: mortgage bonds
JPMorgan Faces Suit Over $10 Bn In Mortgage Bonds

JPMorgan Faces Suit Over $10 Bn In Mortgage Bonds

New York (AFP) — JPMorgan Chase will face a U.S. class-action lawsuit over the sale of $10 billion worth of allegedly falsely valued mortgage bonds before the financial crisis, a judge has ruled.

Late Tuesday New York federal district judge Paul Oetken dismissed the bank’s objections to the suit, first filed in 2009, opening the way for pension funds and others to claim losses on the mortgage-backed securities (MBS) they bought before the crisis.

The plaintiffs in the case accused the bank of packaging mortgages into the bonds that did not meet stated underwriting standards, had false appraisals and false loan-to-value ratios.

That led to sharp losses as the MBS market plummeted following the crash in the U.S. housing market.

The class of plaintiffs, private buyers of the bonds, are led by two California pension funds.

But Oetken refused to set a possible level of damages the plaintiffs could claim, saying they needed to provide more evidence supporting their claims.

Contacted by AFP, JPMorgan declined to comment on the situation.

Last November JPMorgan agreed to pay $13 billion to federal and state agencies for losses related to falsely marketed MBS.

AFP Photo/Chris Hondros

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Bank of America Spends $8.5 Billion To Settle With Investors

Bank of America pre-emptively avoided a legal battle of massive proportions yesterday when they agreed to pay $8.5 billion to investors who had claimed that there were “material discrepancies from underwriting guidelines” (read: lies about quality) in mortgage bonds they purchased from Countrywide, the mortgage lender that Bank of America bought right before the market totally collapsed in 2008. This was good news: Analysts and investors had expected that Bank of America would have to pay up to $50 billion to make the angry investors go away, so $14 billion—a number that also includes the $5.5 billion that the bank is using to buy back defective mortgages—was a relative pittance.

With all that money out of the way to settle accusations of fraud, Bank of America still must contend with lawsuits and investigations related to its mortgage practices. The feds are currently investigating Bank of America’s foreclosure practices, which allegedly include signing foreclosures without reading them. And in at least once instance, Bank of America tried to foreclose on a house that didn’t have a mortgage. [Wall Street Journal]