12:18 PM
Banks' mortgage practices reap more lawsuits
Addison Ray
By Jonathan Spicer and Tom Hals
NEW YORK/WILMINGTON, Delaware | Tue Nov 9, 2010 3:02pm EST
NEW YORK/WILMINGTON, Delaware (Reuters) - Lawsuits against banks over their mortgage lending and foreclosure practices continue to pile up, with JPMorgan, PNC Financial Services and Ally Financial disclosing suits on Tuesday.
JPMorgan Chase & Co (JPM.N) faces two possible class action lawsuits related to foreclosures, the No. 2 U.S. bank said in a regulatory filing.
The suits allege "common law fraud and misrepresentation, as well as violations of state consumer fraud statutes," JPMorgan said in the Securities and Exchange Commission filing, without disclosing who filed them.
Banks, under investigation by state and federal officials for sloppy or even fraudulent foreclosure paperwork, face suits from both borrowers and investors in mortgage-backed securities.
Ally Financial Inc said it has been sued by hedge fund Cambridge Place Investment Management, which has ramped up a legal scrap with Wall Street to recoup money lost on subprime mortgages.
PNC Financial Services Group (PNC.N) said it had been sued by the Federal Home Loan Bank of Chicago, alleging misrepresentations and omissions in connection with the sale of mortgage-backed securities.
Goldman Sachs Group Inc (GS.N), meanwhile, is reviewing the practices of its Litton Loan Servicing unit and has temporarily suspended evictions and foreclosures in several states, according to a regulatory filing on Tuesday.
Bank of America (BAC.N), JPMorgan and Ally's GMAC Mortgage voluntarily imposed brief moratoriums on foreclosures to review their practices but have begun to resume evictions of delinquent borrowers.
U.S. attorneys general for all 50 states are jointly investigating whether banks failed to review documents properly or submitted false information to evict delinquent borrowers.
JPMorgan said in Tuesday's quarterly SEC filing, that it believes the information it provided about the foreclosures was "materially accurate."
Since September, at least two lawsuits seeking class action status have named JPMorgan in federal court for the Northern District of Illinois: one by a Chicago homeowner claiming Wall Street banks were acting together to illegally foreclose on homes, and another by Kentucky homeowners seeking class action status for having home equity lines cut.
It was unclear whether either of these were referred to in the SEC filing. JPMorgan did not respond to requests for information on the lawsuits.
The KBW index of bank stocks was down 1.3 percent in afternoon trading. JPMorgan shares slipped 0.9 percent, PNC shares were off 1.9 percent and Goldman Sachs fell 0.8 percent.
MORTGAGE-BACKED SUITS
JPMorgan also acknowledged it faced suits related to mortgage-backed securities brought by Cambridge Place and brokerage Charles Schwab Corp. (SCHW.N)
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