Wells Fargo Sues JPMorgan Over 800 Soured Mortgage Loans

JPMorgan Chase & Co (JPM.N) was sued by Wells Fargo & Co (WFC.N), which seeks to force it to buy back more than 800 soured mortgage loans that it oversees as trustee.

In a complaint made public on Wednesday in the Delaware Chancery Court, Wells Fargo accused JPMorgan's EMC Mortgage LLC unit of refusing its demands that EMC buy back the loans, which were contained in Bear Stearns Mortgage Funding Trust 2007-AR2.

JPMorgan bought Bear Stearns and its EMC unit in 2008.

In the complaint, Wells Fargo said EMC and its affiliates routinely approved mortgage loans despite "clear defects" in loan applications, including faulty appraisals and inflated borrower incomes.

It also said a forensic review showed that EMC breached representations and warranties on 89 percent of a sample of 948 of mortgage loans.

"The loans have been plagued by an alarming rate of defaults and foreclosures," Wells Fargo said.

JPMorgan spokesman Patrick Linehan declined to comment.

Trustees such as Wells Fargo act on behalf of investors in securities backed by underlying loans.

Some such as Wells Fargo and US Bancorp (USB.N), which sued Bank of America Corp (BAC.N) last month, have taken legal action against other banks when they believe misrepresentations have been made regarding the securities.

JPMorgan is the nation's second-largest bank by assets, while Wells Fargo is the fourth-largest. Wells Fargo is also the largest U.S. mortgage lender.

The case is Bear Stearns Mortgage Funding Trust 2007-AR2 by Wells Fargo Bank NA as Trustee v. EMC Mortgage LLC, Delaware Chancery Court, No. CA6861.

(Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Siebenstein]

04:37 AM on 09/23/2011

of

[Siebenstein]

04:37 AM on 09/23/2011

I so wish Washington Mutual could still sue these freaks og JPM Chase !

[norkas]

10:44 AM on 09/21/2011

If anything these lawsuits will help to deter banks from doing this for a long time. But as we know there is the SM syndrome. SHORT MEMORY

[Siebenstein]

04:34 AM on 09/23/2011

It's STM.

[JDUPRE]

12:28 PM on 09/17/2011

Now they are eating their own. FANTASTIC !

[Siebenstein]

04:34 AM on 09/23/2011

t is, but the homeowners need to get in before they are left with nothing.

[MyTake]

01:05 AM on 09/17/2011

And just where does Eric Holder stand on this issue!

Even James Carville is slimming Obama on his failure to prosecute the crimes of Wall Street.

"JPMorgan bought Bear Stearns and its EMC unit in 2008"

Shouldn't this sentence read "JPMorgan bought Bear Stearns and its EMC unit in 2008 for just $10 per share which was grudgingly raised from their initial offer of just $2 per share."

All evil in America arises out of The Pratt House and Wall Street!

And here is a partial list of JPMorgan Chase crimes for which no executive has spent a day in jail.

2002 Fined $80 million over deceiving investors.
2003 Paid $2 billion to ENRON investor's settlement
2004 Paid $2 billion to WorldCom investor's settlement
2009 Fined $722 million for bribing Jefferson County officials
2010 Fined $49 million in London for defrauding investors over a 7 year period
2011 Paid $27 million for overcharging thousands of military families on their mortgages

And Obama pulled his Chief of Staff right off the Board of Directors at JPMorgan Chase.

All is well in America!

[sueinmn]

12:20 AM on 09/17/2011

Banks are sueing banks. Wow, will government take notice and action? Has criminal activity been legalized and where do I sign up to get mine?
All I got was the loss of a job like many others. Whicj of course turns into the loss of much more in my life. Banks need tough regulation and even tougher oversight. The GOP spin machine of fooling people all the time and really making fools of all at election must stop. If not we are doomed. I guess wait until it happens to you before you open eys to todays corruption and greed. But then again as long as we have a black man we vcan blame, still nothing will get better, only worse.

[lairsborn]

05:33 PM on 09/16/2011

Hi all

Let's just have a do over

[lairsborn]

05:18 PM on 09/16/2011

Hi all

So what happens when banks begin sueing each other

[Siebenstein]

04:35 AM on 09/23/2011

Why don't you answer that for us?

[lairsborn]

03:38 PM on 09/23/2011

you they are starting to feed off each other . serves them right. many good people lost homes and their retirement because the baracuras were greedy

[vabnker]

03:51 PM on 09/16/2011

I hope Wells Fargo wins this suit. I lost a $197,500 401K in the mortgage melt down because the bank where i worked invested in bundled motgages and nearly went bankrupt. My 401 was in compny stock that dropped from $70 to 4. Something needs to be done.

[therule72]

04:50 PM on 09/16/2011

ah, vab... damned sorry to hear that... u invested far too much with your employer.... hope ya had OTHER investments.

[Robert A Alba]

03:20 PM on 09/16/2011

Good !! Let them go after each other. Maybe they'll sue each other into oblivion. Then we might be able to develop a financial system with some real safeguards again.

[RosieRetro]

02:24 PM on 09/16/2011

If banks and Wall Street weren't so greedy, there would be almost no "soured" mortgages, because folks would still be making normal payments and not defaulting due to get-rich-quick over-inflated payments.

[Mharley vet]

02:14 PM on 09/16/2011

EMC sucs!

[Guy Fratianni]

02:01 PM on 09/16/2011

Been saying this for awhile even though the Democrats wanted to give the poor mtg's you have to do the proper underwriting or it's a case of fraud. So now the sharks are circling the shark.

[bdzdean]

01:57 PM on 09/16/2011

As for the property appraiser comments.

My mother was a Real Estate agent many years ago. Not only were property appraisers paid a cash gift commission from a Real Estate agent(s) for helping get the numbers to get where they needed to be. If an appraiser failed to make the numbers work, the appraiser would get black balled by word of mouth through the Real Estate agents and their listing offices.

A lot of cash gifts were handed out then, and are most likely still being handed out to get a deal done on a home purchase/mortgage approval.

[noknrc]

02:18 PM on 09/16/2011

Add to your comment that the mortgage companies would stop sending them work. All mortgage appraisals are ordered by the company doing the lending. If a appraiser does not come up with an amount that will make the deal work the mortgage company loses money and then the real estate office then sent them the deal will not send more home buyers their way. The guidelines set for appraisers is they can only used closed sales with in the last 6 months in the local area as the subject. If they have to use an older closing they have to explain why. When sales were down they extended the area to within a school district. That made it easier since the values of the next town are much higher then the subject town but they are in the same school district so that is ok.

[mikedom22]

01:48 PM on 09/16/2011

This is rich a crook sueing a crook for sellingl them bad mogages that they probaly knew were bad but wanted to make money so the bought them anyway. As the economy goes in th toilet people lose homes and jobs because of the crooks and the people that foot the bill for their crooked dealings are the people that lose their homes and jobs. And not one of them will spend a day in jail because our government will do nothing to them because they are all buddies.