Bloomberg News

Mortgage Trustees Seek $4.5 Billion JPMorgan Accord Approval

August 04, 2014

Mortgage-bond trustees including U.S. Bank N.A. and Bank of New York Mellon Corp. (BK:US) asked a New York state court judge to approve a $4.5 billion settlement with JPMorgan Chase & Co. (JPM:US) over investor claims of faulty home loans.

JPMorgan made an offer to the trustees in November to settle claims relating to the underwriting and servicing of loans in 330 residential mortgage securitization trusts, as well as claims over document delivery, according to a petition filed yesterday in New York State Supreme Court in Manhattan.

The offer was negotiated by New York-based JPMorgan and a group of 21 institutional investors, including BlackRock Inc. and Pacific Investment Management Co., that held more than $24 billion, or 32 percent of the securities issued by the trusts, according to the petition.

The accord is being declined by trustees for five of the trusts and part of another, according to a notice posted online last week. The lack of a more sweeping approval may leave the bank exposed to a larger payout. The deadline for accepting the proposed settlement has been pushed back several times.

JPMorgan negotiated the agreement in a bid to move past lawsuits tied in part to the housing crisis. The accord was announced the week before the largest U.S. bank agreed to a record $13 billion settlement with government agencies over faulty mortgage securities.

Pools of home loans securitized into bonds were central to the housing bubble that helped send the U.S. into the worst recession since the 1930s. The housing market collapsed and the market for the securities evaporated.

The case is In the matter of the application of U.S. Bank National Association, 652382/2014, New York State Supreme Court, New York County (Manhattan)

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net. Charles Carter, Joe Schneider


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Companies Mentioned

  • BK
    (Bank of New York Mellon Corp/The)
    • $38.96 USD
    • -0.38
    • -0.98%
  • JPM
    (JPMorgan Chase & Co)
    • $60.94 USD
    • 0.03
    • 0.05%
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