Banks' mortgage practices reap more lawsuits
NEW YORK/WILMINGTON, Delaware
NEW YORK/WILMINGTON, Delaware (Reuters) - Lawsuits against banks over their mortgage lending and foreclosure practices continue to pile up, with JPMorgan, PNC Financial Services and Ally Financial disclosing suits on Tuesday.
JPMorgan Chase & Co faces two possible class action lawsuits related to foreclosures, the No. 2 U.S. bank said in a regulatory filing.
The suits allege "common law fraud and misrepresentation, as well as violations of state consumer fraud statutes," JPMorgan said in the Securities and Exchange Commission filing, without disclosing who filed them.
Banks, under investigation by state and federal officials for sloppy or even fraudulent foreclosure paperwork, face suits from both borrowers and investors in mortgage-backed securities.
Ally Financial Inc said it has been sued by hedge fund Cambridge Place Investment Management, which has ramped up a legal scrap with Wall Street to recoup money lost on subprime mortgages.
PNC Financial Services Group said it had been sued by the Federal Home Loan Bank of Chicago, alleging misrepresentations and omissions in connection with the sale of mortgage-backed securities.
Goldman Sachs Group Inc, meanwhile, is reviewing the practices of its Litton Loan Servicing unit and has temporarily suspended evictions and foreclosures in several states, according to a regulatory filing on Tuesday.
Bank of America, JPMorgan and Ally's GMAC Mortgage voluntarily imposed brief moratoriums on foreclosures to review their practices but have begun to resume evictions of delinquent borrowers.
U.S. attorneys general for all 50 states are jointly investigating whether banks failed to review documents properly or submitted false information to evict delinquent borrowers.
JPMorgan said in Tuesday's quarterly SEC filing, that it believes the information it provided about the foreclosures was "materially accurate."
Since September, at least two lawsuits seeking class action status have named JPMorgan in federal court for the Northern District of Illinois: one by a Chicago homeowner claiming Wall Street banks were acting together to illegally foreclose on homes, and another by Kentucky homeowners seeking class action status for having home equity lines cut.
It was unclear whether either of these were referred to in the SEC filing. JPMorgan did not respond to requests for information on the lawsuits.
The KBW index of bank stocks was down 1.3 percent in afternoon trading. JPMorgan shares slipped 0.9 percent, PNC shares were off 1.9 percent and Goldman Sachs fell 0.8 percent.
JPMorgan also acknowledged it faced suits related to mortgage-backed securities brought by Cambridge Place and brokerage Charles Schwab Corp.
Schwab is also among those bond investors that are suing Citigroup Inc, which, with Bank of America, last week disclosed suits related to mortgage underwriting.
"There is a lot of damage from investors buying RMBS (residential mortgage-backed securities) from investment banks in '05, '06 and '07," said Gerald Silk, a partner at Bernstein Litowitz Berger & Grossmann LLP, who filed the Cambridge Place lawsuit in Massachusetts.
"Enormous damages were sustained from those vintages of RMBS," he said.
JPMorgan added that it was the parent defendant in "nine separate individual actions filed by the Federal Home Loan Banks of Pittsburgh, Seattle, San Francisco, Chicago and Indianapolis in various state courts around the country."
In October, the Federal Home Loan Bank of Chicago sued several banks over $3.3 billion of mortgage-backed securities it had purchased. PNC said in a filing it is being sued over $345 million of the securities, sold by National City, which was acquired by PNC in December 2008.
Also on Tuesday, Ally said it has been named in six mortgage bond-related lawsuits filed by investors including Cambridge place, Charles Schwab, and the Federal Home Loan Banks of Chicago and Indianapolis.
MBIA Insurance Corp also filed two lawsuits against Ally over mortgage bonds, Ally disclosed in an SEC filing.