Sources say JP Morgan Chase has intervened in a Pennsylvania lawsuit to prevent the release of the federal government's draft lawsuit against the bank. This lawsuit was never released because the parties recently agreed to a record $13 billion settlement, which prevented the release of the government's complaint.
JP Morgan Attempts to Stop Release of Documents Showing Fraud
P Morgan Chase, according to sources tracking the current drama, is nervously battling a recent order from a Pennsylvania judge that would force the bank to release the text of the government’s draft lawsuit, which was never aired publicly, thanks to the settlement.
The controversial order was issued in a pending case between the Federal Home Loan Bank of Pittsburgh (FHLBP) and JP Morgan. The Pittsburgh bank, sources say, has requested the documents, as well as the identity of the whistleblower who revealed the bank's illegal foreclosure practices.
Sources say the Pittsburgh bank sued JP Morgan because the home loan giant allegedly sold faulty mortgage-backed securities to the regional bank that ultimately led to the loss of $2.3 billion. The sale of these securities has triggered a wave of lawsuits against JP Morgan after the mortgage bonds started collapsing in 2008 when tens of thousands of homeowners started defaulting on abusive home loans.
Major Bank Tries to Conceal Fraudulent Mortgage Activity
By agreeing to a loft settlement with the federal government earlier this year, JP Morgan was able to avoid the release of embarrassing information about its home loan practices. But sources believe the bank will eventually have to release the government's lawsuit, especially as it faces so many lawsuits.
Sources say millions of homeowners were harmed by the bank's sale of their mortgages to large securities in 2006 and 2007. When these mortgages were sold, homeowners often lost track of who actually held their mortgages, and many experienced a wide range of trouble with the servicing of their home loans.
If the government's lawsuit is eventually released, individual homeowners looking to stop foreclosure will have a tremendous amount of new ammunition against the banking giant. And it will be good news for consumers and their foreclosure defense attorneys.