An indication that the financial crisis is not that far behind us, Northbrook, Ill.-based
Filed in the New York State Supreme Court in Manhattan, Allstate Bank et al v. JPMorgan Chase Bank NA et al, New York State Supreme Court, New York County, No. 650398/2011, also names various subsidiaries including Washington Mutual Capital Corp. and Bear Stearns as defendants. The suit arises out of the sale of residential mortgage-backed securities sold to Allstate from 2004 to 2007. JP Morgan declined to formally comment on the lawsuit, according to a Reuters’ report, which recounted that its chairman, James “Jamie” Dimon, indicated that JP Morgan would contest lawsuits filed on a securitization by securitization basis. “It’s going to be a long, ugly mess,” Dimon was reported to have said.
"Whereas Allstate was made to believe it was buying highly-rated, safe securities backed by pools of loans with specifically-represented risk profiles, in fact, 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," the lawsuit states.
Allstate alleges the defendants routinely disregarded their own underwriting guidelines when issuing or packaging the securities. "The Offering Materials represented that a particular, reasonable underwriting process was followed to ensure that only loans that the borrower could repay would be included in the pools underlying the Certificates," the lawsuit states. "In fact, the disclosed underwriting standards were systematically ignored in originating or otherwise acquiring non-compliant loans."
In December 2010, Allstate filed a lawsuit against
Keywords: financial crisis, toxic assets, Allstate, JP Morgan, lawsuit
