NCUA Sues JPMorgan Chase Over Mortgage Securities

The National Credit Union Administration has sued a JPMorgan Chase (JPM) unit claiming Bear Stearns & Co., which it acquired in 2008, used misleading documents in selling $3.6 billion in mortgage-backed securities to four corporate credit unions that later failed.

The documents said the mortgage originators had adhered to underwriting guidelines that had been “systematically abandoned,” the credit union agency said in a federal court lawsuit filed Dec. 14 in Kansas City, Kan.

“Because the mortgages in the pools collateralizing the [residential mortgage-backed securities] were largely underwritten without adherence to the underwriting standards in the offering statements, the RMBS were significantly riskier than represented,” the NCUA said in its complaint.

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