More legal trouble for BofA, JPMorgan
New lawsuits have been filed against JPMorgan Chase and Bank of America seeking compensatory and punitive damages following $4.5 billion in bad mortgage debt, Reuters reported.
Sealink Funding said it lost money after buying nearly $2.4 billion of residential mortgage-backed securities from JPMorgan and $1.6 billion from Bank of America from 2005 to 2007, relying on offering materials that were misleading about the quality of the underlying loans.
According to court papers, Sealink is an Irish entity that oversees risky RMBS that contributed to the near collapse of Germany’s Landesbank Sachsen AG.
Another plaintiff, Germany’s Landesbank Baden-Württemberg, raised similar claims in a separate lawsuit against JPMorgan for over $500 million of RMBS that it said it bought.
The lawsuits claim that the banks of packaged large amounts of high-risk mortgages by such issuers as Countrywide Financial, now owned by Bank of America, as well as Bear Stearns and Washington Mutual, the latter now owned by JPMorgan, in pursuit of higher profit.
“This misconduct has resulted in astounding rates of default on the loans underlying the defendants’ RMBS and massive downgrades of the [investors’] certificates, the vast majority of which are now considered ‘junk,'” the lawsuits, filed in New York Supreme Court in Manhattan, said.
Neither the lawyers for the plaintiffs, nor BofA and JPMorgan had an immediate comment.
Separately , BofA is seeking court approval of an $8.5 billion global settlement covering investors in mortgage pools with $174 billion of unpaid Countrywide principal balances. That bank and JPMorgan are alsoamong lenders negotiating with regulators including all 50 state attorneys general on a multibillion-dollar accord addressing foreclosure abuses, [Reuters]