Allstate sues JPMorgan over mortgage-backed securities
Allstate Corp., the largest publicly traded U.S. home and auto insurer, sued JPMorgan Chase & Co. over claims the bank fraudulently sold it about $700 million of residential mortgage-backed securities.
Allstate, based in Northbrook, is seeking damages that include the securities' drop in market value as well as principal and interest, according to the lawsuit filed yesterday in New York state Supreme Court in Manhattan. The insurer bought the certificates from JPMorgan and other defendants the bank acquired, including WaMu Asset Acceptance Corp. and Bear Stearns Asset Backed Securities LLC, the suit claims.
“Allstate was made to believe it was buying highly rated, safe securities,” the insurer's complaint alleges. “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.”
A spokeswoman at New York-based JPMorgan, Jennifer Zuccarelli, declined to comment on the lawsuit.
The suit alleges material misrepresentations and omissions regarding underwriting standards, owner occupancy data, and loan-to-value ratios. Its claims include common law fraud and negligent misrepresentation.
The case is Allstate Bank v. JPMorgan Chase Bank, 650398/2011, New York state Supreme Court (Manhattan).