J.P. Morgan, BofA Lawsuit – Sued (Again)

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Morgan Chase & Co and Bank of America Corp

Hit with new lawsuit by investors

Investors who claim losses on at least $4.5 billion of soured mortgage debt are the latest to institute lawsuit litigation targeting the two largest U.S. banks.

The plaintiff, Irish fund Sealink Funding Ltd, filed a $2.4 billion lawsuit relating to residential mortgage-backed securities (RMBS) from JPMorgan. The corporation also sued Bank of America for $1.6 billion from Bank of America from 2005 to 2007. Corporation representatives relied on offering materials that they believed were misleading about the quality of the underlying loans.

According to court papers, Sealink is an Irish entity that oversees risky RMBS that contributed to the near collapse of Germany’s Landesbank Sachsen AG. Another plaintiff, Germany’s Landesbank Baden-Wurttemberg, raised similar claims in a separate lawsuit against JPMorgan of over $500 million of RMBS the corporation bought.

The lawsuits accuse these financial institutions of presenting large amounts of high-risk mortgages in pursuit of higher profit margins by issuers such as as Countrywide Financial (now owned by Bank of America), Bear Stearns, and Washington Mutual (now owned by JPMorgan). The lawsuits assert This misconduct has resulted in astounding rates of default on the loans underlying the defendants’ RMBS and massive downgrades of the (investors’) certificates, the vast majority of which are now considered ‘junk.’

Investors are seek compensatory and punitive damages in the lawsuits, which were filed on September 29^th, which were in the New York State Supreme Court, Manhattan.

Bank of America spokesman Lawrence Grayson said the bank will defend against the lawsuit by Sealink, which, he stated, appears to be another sophisticated investor looking for someone to blame for losses caused by a downturn in the economy.

JPMorgan spokeswoman Jennifer Zuccarelli and Bernstein Litowita, Bernstein & Grossmann (legal representative for Sealink and Landesbank Baden-Wurttemberg) declined to comment.

This is yet another lawsuit filed the same day. Britain’s Barclays Plc was sued by Germany’s HSH Nordbank AG, which said lost $40&nbspmillion after being misled into buying risky RMBS. Barclays spokeswoman Kristin Friel also declined comment.

Banks and financial institutions face many lawsuits by mortgage securities investors. The investors seek to the institutions hold liable responsible for debt losses on debt that seemed to be safe, but returned losses when the housing and credit crises began more than four years ago.

Bank of America seeks court approval of an $8.5 billion global settlement to cover investors in mortgage pools with $174 billion of unpaid Countrywide principal balances. That bank and JPMorgan are among lenders negotiating with regulators, and include attorney generals in all 50 state attorneys resulting in a multibillion-dollar lawsuit settlements that addresses foreclosure abuses.

Mad Mike’s America thanks Reuters and News Daily.

Will Occupy Together use these lawsuits as evidence of further support to fuel protests?