The bank has been accused of engaging in a wide range of illegal activities, including fraudulent foreclosures, but the government’s recent lawsuit, which resulted in a record $13 billion settlement, was never publicly aired, thanks to the settlement. But a new civil lawsuit against the company may result in the release of confidential information.
JP Morgan Seeks to Protect Documents Revealing Mortgage Fraud
According to reports, JP Morgan Chase, which spawned from the merger of two large banks a few years ago, is anxiously fighting an order from a Pennsylvania judge this October demanding the bank release the federal government’s full complaint, which was concealed after the recent settlement.
The order occurred after the Federal Home Loan Bank of Pittsburgh (FHLBP) asked the judge for the government's draft complaint, as well as the identity of the whistleblower who worked with the government against the bank. FHLBP is seeking information that could help it in its own lawsuit against JP Morgan.
Sources say FHLBP recently filed a lawsuit against JP Morgan because it lost $2.3 billion on mortgage-backed securities that it purchased from the bank in 2006 and 2007. The bank has been the target of multiple lawsuits since the Justice Department launched an investigation into its sale of shaky mortgage bonds that helped bring the global economy to its knees in 2008.
JP Morgan Faces Legal Actions for Fraudulent Mortgage Activity
By keeping the government’s lawsuit secret, JP Morgan temporarily avoided the embarrassment of the release of information regarding its sale of mortgage bonds. But the bank likely won’t be able to keep the information secret forever.
And the bank’s legal nightmares may have just begun. Millions of homeowners were negatively affected by the sale of their mortgages to large securities in recent years. When these mortgages were sold, they often were serviced by different entities than the ones that extended the loans. This often led to many homeowners completely losing track of who actually held their mortgages.
The release of the government lawsuit could help individual homeowners looking to file actions against JP Morgan for foreclosure fraud. The bank reportedly has until November 22 to release the draft of the government’s initial complaint, although it will likely continue to fight the order until then.