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JPMorgan to pay $500 million in Bear Stearns mortgage settlement


reuters.com | January 11, 2015

By Jonathan Stempel

(Reuters) - JPMorgan Chase & Co (JPM.N) has agreed in principle to settle class action litigation arising from Bear Stearns' sale of $17.58 billion of mortgage securities that proved defective during the recent U.S. housing and financial crises.

The largest U.S. bank, which bought Bear in 2008, will pay roughly $500 million to investors led by a group of pension funds, a person familiar with the matter said on Friday. The person requested anonymity because the terms have not been made public.

JPMorgan declined to comment. A lawyer for the investors did not immediately respond to requests for comment.

The accord, which requires court approval, was disclosed in a Thursday night filing with the U.S. District Court in Manhattan.

It is separate from JPMorgan's $13 billion settlement with regulators in November 2013 over mortgage securities sales.

The latest accord resolves claims that Bear violated federal securities laws by selling certificates backed by more than 47,000 largely subprime and low documentation "Alt-A" mortgages in 14 offerings from May 2006 to April 2007.

Investors said the offering documents contained false and misleading statements about the underwriting guidelines used by Bear's EMC Mortgage unit, Countrywide Home Loans and other lenders, and the accuracy of associated property appraisals.

Bear was not accused of fraud, but investors sought to hold it strictly liable and negligent for their losses.

They said nearly all the certificates were cut to "junk" status, although roughly 92 percent, or $16.2 billion, were once rated "triple-A."

The lead plaintiffs are the Public Employees' Retirement System of Mississippi and the New Jersey Carpenters Health Fund. Both sides plan by Feb. 2 to seek preliminary approval of the settlement from U.S. District Judge Laura Taylor Swain.

JPMorgan has resolved similar litigation over mortgage offerings from the former Washington Mutual Inc, which the New York-based bank also bought in 2008. It still faces litigation over some of its own mortgage offerings.

The case is In re: Bear Stearns Mortgage Pass-Through Certificates Litigation, U.S. District Court, Southern District of New York, No. 08-08093.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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