WaMu to pay $26M settlement on mortgage securities
Two former Washington Mutual Bank subsidiaries reached an agreement to pay $26 million to investors to settle claims that the bank had misled them into buying mortgage-backed securities that went bad.
The case had been scheduled to go to trial on Sept. 17 in Seattle, but the court will instead hold a final settlement hearing.
WaMu was the largest bank failure in the U.S. Its assets were acquired by JPMorgan Chase & Co. for $1.9 billion after its 2008 collapse.
The Seattle-based bank and its subsidiaries had underwritten and sold mortgage-backed certificates, which were backed by pools of residential mortgage loans. The value of the certificates collapsed soon after they were issued as the housing bubble burst and the value of mortgage loans fell.
The investors who had purchased the certificates on or before Aug. 1, 2008, claimed that they were misled on the quality of the loans backing the securities. Investors in the suit included the Boilermakers National Annuity Trust, Doral Bank Puerto Rico, the Policemen's Annuity and Benefit Fund of Chicago.
JPMorgan Chase declined to comment.