JP Morgan Chase and Bank of America Sued By Investors
JPMorgan Chase and Bank of America can add to the growing list of legal claims against them over failed mortgage-backed securities as they were each hit with billion-dollar lawsuits from investors this week. The suits come as both have been the targets of multiple state and federal investigations into the mortgage securities industry, in which billions of dollars worth of home loans were bundled together and sold as residential mortgage-backed securities, or RMBS. When the loans began failing, the securities lost most of their value, leading to the onset of the worst US recession since the 1930s.
Sealink Funding Ltd, an Irish firm that handles risky RMBS for a German bank that nearly collapsed from the losses, filed a lawsuit related to $2.4 billion in RMBS which it bought from JP Morgan and $1.6 billion from BoA. The securities were bought between 2005 and 2007, and Sealink claims that they were convinced to buy the securities with misleading documents about the underlying loans. Germany's Landesbank Baden-Wurttemberg filed a separate claim against JP Morgan over $500 billion in RMBS making a similar claim.
All three claims against JP Morgan and Bank of America were filed in New York State Supreme Court in Manhattan. The investors are seeking punitive and compensatory damages.