JP Morgan's Mortgage Unit Sued, Following Allegations It Misrepresented Over 70% Of Loan Portfolio

[stockholmer]

http://www.zerohedge.com/article/jpms-mortgage-unit-sued-disclose-loan-quality-data-following-allegations-it-misrepresented-o

The lawsuits over loan level detail continue to come fast and furious. After late last year Allstate sued Bank of America, providing proof that that the Too Big To Fail bank had repeatedly lied about the quality of its loans and broadly misrepresented its loan book to purchasers, today the Fed's favorite bank, JP Morgan, and specifically its EMC Mortgage division, were sued by Wells Fargo (the trustee) of a mortgage portfolio for refusing to turn over documents detailing the quality of loans bought by the trust.

Bloomberg reports that Wells Fargo & Co., the trustee, is seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2, according to the complaint filed today in Delaware Chancery Court in Wilmington. “The trustee has repeatedly requested that EMC provide access to the subject documents,” Wells Fargo said in the complaint. “EMC has played proverbial ‘rope a dope’ and otherwise continued to drag its feet, and has produced nothing.”

Reading through the complaint, we find that the same rep fraud that Bank of America continues to be in hot water for (and that seemingly everyone involved, and on the defensive side, believes will eventually get swept under the rug) has been quite rampant at all other banks. Specifically, "on August 31, 2010, the Trustee sent a letter to EMC, notifying EMC that the Trustee had received a letter from the law firm of Grais & Ellsworth LLP (“Grais”), which represented an investor in the Trust owning 42% of the outstanding face amount of the Certificates in the Trust, dated August 3, 2010 (the “Grais Letter”). The Grais Letter gave notice to the Trustee that Grais had investigated the condition of 1,317 of the 2,049 Mortgage Loans held by the Trust, and determined that EMC appeared to have violated its representations and warranties in the MLPA with respect to 938 of those loans."

That's roughly 70%: a number which any jury will find to be beyond statistically significant and will certainly impugn intent to defraud. Not surprisingly, neither JPM nor EMS has scrambled to provide the backup... or any required information...............

[aquart]

1. We really need penalties for ignoring evidence requests.

Big, VICIOUS penalties. Like $100,000 a day. Of which 20 percent will go directly to the poor grand jurers sitting and waiting and waiting and waiting. Understand that I spent three years on a jury waiting for similar assholes to obey the law. BTW, when the evidence showed up, it was deliberately misfiled with pages stapled wrongly pretty much everywhere. And the lawyers got away with it.

Any lawyers who pull this crap should be disbarred and jailed.

[truedelphi]

2. Sounds fine to me.

Sock some penalties to these banks.

[jotsy]

3. Wells Fargo doesn't appreciate being stalled and run around?

I'm rather liking the idea of their getting a taste of the medicine they've been dishing out.

And Puhlease! These pilferers understood from the beginning what a game of hot potato they were going to be playing and the development of the zombie banks starting to chew on one another was predicted as this last holiday season launched. Nice call, Sir Pa.

Recommended

[DCKit]

7. For sure. Who among the investors were better equipped than he other big banksters...

to research and determine the actual value of the junk they were buying?

Too many of us rank amateurs saw it from the outside for these folks to be running around now with their hair on fire screaming "Who could have seen this coming?"

[fasttense]

4. Oh what a tangled web we weave

"determined that EMC appeared to have violated its representations and warranties in the MLPA with respect to 938 of those loans. That's roughly 70%" (over 71% by my estimates).

[Joanne98]

5. OMG! 70%? WOW!

[xchrom]

6. Recommend