JP Morgan Securities Sued for $22.5 Billion in Mortgage Fraud

The Grimy Times has learned that J.P. Morgan Securities LLC, JP Morgan Chase Bank N.A., and EMC Mortgage LLC have been hit with a $22.5 billion lawsuit for their alleged role in perpetuating a massive mortgage fraud scheme that left millions of Americans financially devastated.

According to the lawsuit, filed by New York Attorney General Eric T. Schneiderman under the Martin Act, the defendants knowingly made false and misleading statements to investors about the quality of mortgage loans packaged into residential mortgage-backed securities (RMBS) in the lead-up to the 2008 financial crisis.

The investigation, which was spearheaded by the RMBS Working Group, a state-federal task force created by President Obama earlier this year, revealed that the defendants deceived investors about the care with which they evaluated the quality of mortgage loans prior to Bear Stearns & Co’s collapse in early 2008.

“This lawsuit will bring accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said Attorney General Schneiderman. “Our lawsuit demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously.”

The RMBS Working Group, which consists of state and federal law enforcement agencies, has been investigating the creation and sale of RMBS, which are securities backed by pools of mortgage loans. The investigation has revealed widespread misconduct in the industry, including the use of fake or inflated documentation to support mortgage loans.

“This announcement demonstrates that the RMBS Working Group model works,” said RMBS Co-Chair and U.S. Attorney for the District of Colorado John Walsh. “The U.S. Attorney’s Offices across the country, the Office of the Inspector General of the Federal Housing Finance Agency, the Securities and Exchange Commission, and other members of the working group have worked tirelessly to bring this case forward.”

The lawsuit is the first major action taken by the RMBS Working Group since its formation earlier this year. It is a significant milestone in the effort to hold accountable those responsible for the financial crisis and to recover billions of dollars in losses for investors and homeowners.