JPMorgan Chase & Co has agreed to pay USD 18.3 million to settle claims that documents for mortgages acquired by a unit of Bear Stearns Cos failed to disclose material information about interest rates.
The settlement, disclosed in court papers filed on Friday in U.S. District Court in Los Angles, is one of several class actions JPMorgan has agreed to resolve related to option adjustable rate mortgages.
Filed in 2007, the lawsuit alleged that JPMorgan and units of Bear Stearns failed to make proper disclosures related to the resetting of introductory interest rates.
The lawsuit alleged the mortgage documents misleadingly failed to disclose that the loan's principal balance would increase if a borrower made the minimum monthly payment.
The loans were acquired by EMC Mortgage Corp, the lending unit of Bear Stearns, which JPMorgan took over amid the U.S. economic meltdown in 2008.
Following several years of litigation, U.S. District Judge James Otero certified in September 2012 a class of people who from August 2003 to March 2013 had option adjustable rate mortgages purchased by EMC secured by property in California.
JPMorgan continues as part of the settlement to deny wrongdoing. A spokeswoman for JPMorgan declined comment.
"I'm happy with the settlement, and I think given the risk to reward, people are going to be pleased," said Jeffrey Berns, a lawyer for the plaintiffs at Berns Weiss.
Lawyers for the plaintiffs are in the process of settling two other cases against JPMorgan involving option adjustable rate mortgages.
JPMorgan has agreed to pay $10 million in settle a similar lawsuit involving loans acquired by Washington Mutual, which JPMorgan acquired in 2008 following the lender's failure, court papers filed last month show.
The bank has agreed to pay another $2 million to resolve another lawsuit over a smaller set of loans originated by Lending 1st Mortgage and sold or owned by it or EMC, Berns said.
Lending 1st separately agreed last year to pay $150,000 to resolve claims against it in that case, which is pending in U.S. District Court in Oakland, California.
A similar case involving Bank of America Corp's (BAC.N) Countrywide Home Loans Inc is in the process of settling for $100 million in a deal that received preliminary court approval in June.
"All these cases are starting to resolve after six years of litigation," Berns said.
First Published: Wednesday, September 04, 2013, 09:05