Let the lawsuits begin, Chase gets sued over subprime mortgages

Perhaps the $1.8 billion JPMorgan Chase paid for Washington Mutual’s assets wasn’t a bargain after all.  They’ve tried to deny responsibility for any of the toxic assets that were sold to others by WaMu but the FDIC pushed back hard on that one.

Today Allstate filed a $787 million lawsuit against Chase for mortgage-backed securities they bought from WaMu.

Allstate sues JPMorgan over mortgage debt losses

By Jonathan Stempel

NEW YORK, Feb 16 (Reuters) – Allstate Corp (ALL.N) sued JPMorgan Chase & Co (JPM.N) on Wednesday to recover losses after the bank allegedly misrepresented the risks on more than $757 million of mortgage securities the insurer bought.

The lawsuit against the second-largest U.S. bank was filed just seven weeks after Allstate filed a similar lawsuit against Bank of America Corp (BAC.N), the largest bank, over losses on more than $700 million of mortgage securities.

Jennifer Zuccarelli, a JPMorgan spokeswoman, declined to comment on the lawsuit, which was filed Wednesday in the New York State Supreme Court in Manhattan.

Allstate, the largest publicly-traded U.S. home and auto insurer, is one of many to sue lenders for allegedly misleading them about mortgage securities.

The Northbrook, Illinois-based company said it suffered “significant losses” after JPMorgan and its affiliates misled it into believing it was buying “highly-rated, safe securities” backed by high-quality loans.

“In fact,” Allstate said, “defendants knew the pool was a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default.”

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