Source says JPMorgan under pressure to settle mortgage claims

By IVCPOST Staff Reporter

Aug 28, 2013 03:19 AM EDT

A source familiar with the matter had said to Reuters that JPMorgan Chase & Co is pressured to settle mortgage claims by the U.S. Federal Housing Finance Agency. The financial institution should pay at least USD6 billion to settle lawsuits over USD33 billion worth of bonds backed by subprime mortgages. The source declined to be named and was not authorized to comment on the matter. An FHFA spokeswoman declined to comment. 

The lawsuits accused JPMorgan of misrepresenting their audits on the underlying mortgages and had said that the audits did not meet investors' criteria. The securities at issue include bonds that were sold by Washington Mutual and Bear Stearns. During the financial crisis, the struggling institutions were taken over by JPMorgan with encouragement from the government.

The source also disclosed that in defense, JPMorgan argued that it should pay less to settle the claims by the U.S. Federal Housing Finance Agency.

The FHFA litigation is one among a multitude of legal issues faced by JPMorgan. The company has also been deep in investigations on the USD6.2 billion "London Whale" derivatives loss last year. 

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