JPMorgan Settles Mortgage Bond Suit For $388 Million

Posted by Patrick Barnard on July 20, 2015 No Comments
Categories : Residential Mortgage

JPMorgan Chase will pay $388 million to settle allegations brought by investors who claimed the bank misled them about the degree of risk associated with $10 billion worth of residential mortgage-backed securities (MBS) sold prior to the financial crisis.

Law firm Robbins Geller Rudman & Dowd filed the suit on behalf of investors and two pension funds – Laborers Pension Trust Fund for Northern California and Construction Laborers Pension Trust for Southern California – that saw their values severely impacted by the losses incurred on the mortgage bonds during the financial crisis that began in 2008. The action reportedly brings to close one of the last remaining MBS purchaser class actions arising from the mortgage meltdown.

The firm says in a statement that the settlement represents, on a percentage basis, ‘the largest recovery ever achieved in an MBS purchaser class action.’

‘We couldn't have achieved such a stellar recovery without the leadership of the Northern and Southern California Laborers Pension Funds,’ says Luke Brooks, on of the lead attorneys on the case, in a statement. ‘These funds not only stepped forward to protect their participants' hard earned retirement savings, but equally important they committed themselves to the trial of this action, which allowed us to maximize the recovery for the class.’

The settlement was achieved after six years of hard-fought litigation and an extensive investigation into all facets of defendants' securitization practices – a process that resulted in the production of more than 80 million pages of documents from defendants and third-parties, over 40 witness depositions, and consultation with experts in diverse and complex fields such as mortgage re-underwriting, securitization due diligence, statistics, and economics, the law firm says in its statement.

For more, check out this Bloomberg News report..

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