JPMorgan may issue mortgage securities backed by bad loans

(Reuters) - JPMorgan Chase & Co (JPM.N) plans next year to issue U.S. commercial mortgage securities backed by defaulted loans, the Wall Street Journal said, citing people familiar with the matter.

The bank has approached ratings firms with two pools of distressed loans that it acquired from European banks and other financial institutions, the Journal said.

JPMorgan wants to create commercial mortgage-backed securities, or CMBS, backed by the troubled properties, with interest and principal payments coming from property sales and the buildings' reduced cash flows, according to the newspaper.

Officials at the bank could not be reached by Reuters outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Matt Driskill)