NEW YORK, April 10 A New York judge has narrowed
a lawsuit by bond insurer Assured Guaranty Ltd against
JPMorgan Chase & Co over alleged misrepresentations
involving $337 million in mortgage-backed securities sold by
The lawsuit, filed in New York state court last year,
alleged that Bear Stearns and its EMC Mortgage arm knew the pool
of more than 6,000 home-equity lines of credit that served as
collateral for the 2005 transaction was plagued by defective
loans. JPMorgan bought Bear after it collapsed in 2008 in a
The ruling Tuesday by Manhattan Supreme Court Justice
Charles Ramos limited Assured's breach of contract claims
against JPMorgan to compelling the bank to repurchase defective
loans that didn't follow underwriting guidelines.
Assured, backed by billionaire investor Wilbur Ross, is
among several insurers, including Ambac Financial Group Inc
and MBIA Inc, that claim banks misled them
into insuring mortgage-backed securities before the housing
market meltdown by concealing significant risk in the underlying
Assured recently won a $106.5 million judgment against
Flagstar Bancorp Inc in the first such case to go to
Representatives for Assured and JPMorgan did not immediately
comment on Tuesday's ruling.
JPMorgan had also moved to dismiss a fraud claim brought by
Assured, but both sides agreed to hold off pending a state
appeals court decision in another case pitting CIFG Assurance
North America against Goldman Sachs Group Inc
that resulted in the dismissal of a similar claim.
Assured said in the lawsuit that it had paid out more than
$43 million in claims as of 2011 after the transaction suffered
losses exceeding $75 million.
The case is Assured Guaranty v. EMC Mortgage, New York State
Supreme Court, New York County, No. 650805/12.