Ambac revives JPMorgan mortgage lawsuit
* Says Bear Stearns deceived it into insuring bad loans
* Seeks $641 million in claims payments plus future claims
* JPMorgan declines comment
NEW YORK, Feb 17 (Reuters) – Bankrupt bond insurer Ambac
Financial Group Inc (ABKFQ.PK: Quote, Profile, Research) has filed new legal claims
stemming from its insurance of Bear Stearns mortgage-backed
securities, after another court dismissed the case.
Ambac sued JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), which bought Bear
Stearns and its EMC Mortgage business in early 2008. The
lawsuit, brought in a New York state court on Thursday,
contends that Bear Stearns misled Ambac into insuring bad pools
of mortgage-backed securities.
The lawsuit revives a lawsuit lodged in federal court that
was dismissed last week by a judge who said he lacked
jurisdiction. Ambac contends that Bear Stearns recklessly
packaged bad loans into insured securities and that Bear’s
acquirer, JPMorgan, failed to honor a variety of contractual
promises.
JPMorgan was not immediately available to comment.
Ambac, which had been the second-largest U.S. bond insurer,
filed for bankruptcy last November after being crushed by
losses on mortgage bonds.
The lawsuit in part concerns whether EMC, which securitized
some mortgage loans that went bad, pocketed money from
originators to address “early payment defaults” rather than
apply it as intended toward the bonds backed by the loans.
Ambac said that by doing so, Bear exposed it to more
potential losses by virtue of its having insured those bonds.
In the lawsuit, Ambac said it has paid out more than $641
million in claims on just four transactions. It is seeking
damages including all of the claims payments it has made and
may make in the future.
The case is Ambac Assurance Corp. vs. EMC Mortgage Corp and
J.P. Morgan Securities Inc, New York State Supreme Court, New
York County, No. 650421/2011.
(Reporting by Jonathan Stempel, Clare Baldwin and Ben
Berkowitz; Editing by Steve Orlofsky)
Category: Business News
