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A JPMorgan Chase & Co. unit refused to give mortgage trust investors more than 500,000 loan files that would show them how many of the loans are bad and must be repurchased, a trustee said in a court filing.
A unit of Deutsche Bank AG said it has a right to the files as trustee for the investors. The investors own 99 mortgage- backed-securities trusts that were built on loans made by Washington Mutual Bank before it was seized by regulators and sold to JPMorgan in 2008 for $1.9 billion.
“These access rights are unqualified and have been unequivocally breached by JPMC,” Deutsche Bank said in court papers filed in federal court in Washington on Jan. 14.
Mortgage-bond investors and bond insurers have accused loan sellers like WaMu and JPMorgan or bond underwriters of often misrepresenting the quality of the underlying debt. Those misrepresentations can trigger contractual or legal provisions requiring repurchases, investors claim. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan bond analysts said in October.
Thomas A. Kelly, a JPMorgan spokesman, declined to comment.
Lost Value
Deutsche Bank National Trust Co.’s suit on behalf of investors against New York-based JPMorgan and the Federal Deposit Insurance Corp. claims the trusts have lost $6 billion to $10 billion in value. WaMu expected some of the loans it put in the trusts to go bad, according to a U.S. Senate investigation cited by Deutsche Bank.
JPMorgan and the FDIC have asked a judge to throw out the case. The Deutsche Bank filing is the trustee’s response to the motion to dismiss the lawsuit.
The outcome of the case could affect Washington Mutual Bank noteholders, who have filed claims in the receivership case being overseen by the FDIC, Kevin Starke, senior vice president with CRT Capital Group LLC said in an interview today.
Should Deutsche Bank win the case on behalf of the trusts, it would either have a claim against JPMorgan or the FDIC, depending on how the judge rules, Starke said. That claim would compete with other creditors of Washington Mutual Bank.
EMC Mortgage
JPMorgan’s EMC Mortgage said this week that it plans to turn over documents detailing the quality of loans in a mortgage trust managed by San Francisco-based Wells Fargo & Co. in an attempt to resolve a lawsuit.
Wells Fargo sued seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2. The complaint, filed in Delaware Chancery Court, accused EMC of playing “rope a dope” and dragging its feet.
The case is Deutsche Bank National Trust Co. v. Federal Deposit Insurance Corp., 09-01656, U.S. District Court, District of Columbia (Washington).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch@bloomberg.net.
A unit of Deutsche Bank AG said it has a right to the files as trustee for the investors. The investors own 99 mortgage- backed-securities trusts that were built on loans made by Washington Mutual Bank before it was seized by regulators and sold to JPMorgan in 2008 for $1.9 billion.
“These access rights are unqualified and have been unequivocally breached by JPMC,” Deutsche Bank said in court papers filed in federal court in Washington on Jan. 14.
Mortgage-bond investors and bond insurers have accused loan sellers like WaMu and JPMorgan or bond underwriters of often misrepresenting the quality of the underlying debt. Those misrepresentations can trigger contractual or legal provisions requiring repurchases, investors claim. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan bond analysts said in October.
Thomas A. Kelly, a JPMorgan spokesman, declined to comment.
Lost Value
Deutsche Bank National Trust Co.’s suit on behalf of investors against New York-based JPMorgan and the Federal Deposit Insurance Corp. claims the trusts have lost $6 billion to $10 billion in value. WaMu expected some of the loans it put in the trusts to go bad, according to a U.S. Senate investigation cited by Deutsche Bank.
JPMorgan and the FDIC have asked a judge to throw out the case. The Deutsche Bank filing is the trustee’s response to the motion to dismiss the lawsuit.
The outcome of the case could affect Washington Mutual Bank noteholders, who have filed claims in the receivership case being overseen by the FDIC, Kevin Starke, senior vice president with CRT Capital Group LLC said in an interview today.
Should Deutsche Bank win the case on behalf of the trusts, it would either have a claim against JPMorgan or the FDIC, depending on how the judge rules, Starke said. That claim would compete with other creditors of Washington Mutual Bank.
EMC Mortgage
JPMorgan’s EMC Mortgage said this week that it plans to turn over documents detailing the quality of loans in a mortgage trust managed by San Francisco-based Wells Fargo & Co. in an attempt to resolve a lawsuit.
Wells Fargo sued seeking access to files for more than 2,000 underlying mortgages in the Bear Stearns Mortgage Funding Trust 2007-AR2. The complaint, filed in Delaware Chancery Court, accused EMC of playing “rope a dope” and dragging its feet.
The case is Deutsche Bank National Trust Co. v. Federal Deposit Insurance Corp., 09-01656, U.S. District Court, District of Columbia (Washington).
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch@bloomberg.net.
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