JP Morgan Chase 2014 Annual Report Download - page 301

JPMorgan Chase & Co./2014 Annual Report 299
various stages of litigation. One such class action has been
settled, subject to final approval by the court.
Repurchase Litigation. The Firm is defending a number of
actions brought by trustees, securities administrators or
master servicers of various MBS trusts and others on behalf
of purchasers of securities issued by those trusts. These
cases generally allege breaches of various representations
and warranties regarding securitized loans and seek
repurchase of those loans or equivalent monetary relief, as
well as indemnification of attorneys’ fees and costs and
other remedies. Deutsche Bank National Trust Company,
acting as trustee for various MBS trusts, has filed such a suit
against JPMorgan Chase Bank, N.A. and the Federal Deposit
Insurance Corporation (the “FDIC”) in connection with a
significant number of MBS issued by Washington Mutual;
that case is described in the Washington Mutual Litigations
section below. Other repurchase actions, each specific to
one or more MBS transactions issued by JPMC and/or Bear
Stearns, are in various stages of litigation.
In addition, the Firm and a group of 21 institutional MBS
investors made a binding offer to the trustees of MBS issued
by JPMC and Bear Stearns providing for the payment of
$4.5 billion and the implementation of certain servicing
changes by JPMC, to resolve all repurchase and servicing
claims that have been asserted or could have been asserted
with respect to the 330 MBS trusts issued between 2005
and 2008. The offer does not resolve claims relating to
Washington Mutual MBS. The seven trustees (or separate
and successor trustees) for this group of 330 trusts has
accepted the settlement for 319 trusts in whole or in part
and excluded from the settlement 16 trusts in whole or in
part. The trustees’ acceptance is subject to a judicial
approval proceeding initiated by the trustees and pending
in New York state court. Certain investors in some of the
trusts for which the settlement has been accepted have
intervened in the judicial approval proceeding, challenging
the trustees’ acceptance of the settlement.
Additional actions have been filed against third-party
trustees that relate to loan repurchase and servicing claims
involving trusts that the Firm sponsored.
Derivative Actions. Shareholder derivative actions relating
to the Firm’s MBS activities have been filed against the Firm,
as nominal defendant, and certain of its current and former
officers and members of its Board of Directors, in New York
state court and California federal court. Two of the New
York actions have been dismissed and one is on appeal. A
consolidated action in California federal court has been
dismissed without prejudice for lack of personal jurisdiction
and plaintiffs are pursuing discovery.
Government Enforcement Investigations and Litigation. The
Firm is responding to an ongoing investigation being
conducted by the Criminal Division of the United States
Attorney’s Office for the Eastern District of California
relating to MBS offerings securitized and sold by the Firm
and its subsidiaries. The Firm has also received subpoenas
and informal requests for information from state authorities
concerning the issuance and underwriting of MBS-related
matters. The Firm continues to respond to these MBS-
related regulatory inquiries.
In addition, the Firm continues to cooperate with
investigations by DOJ, including the U.S. Attorney’s Office
for the District of Connecticut, the SEC Division of
Enforcement and the Office of the Special Inspector General
for the Troubled Asset Relief Program, all of which relate to,
among other matters, communications with counterparties
in connection with certain secondary market trading in
residential and commercial MBS.
The Firm has entered into agreements with a number of
entities that purchased MBS that toll applicable limitations
periods with respect to their claims, and has settled, and in
the future may settle, tolled claims. There is no assurance
that the Firm will not be named as a defendant in additional
MBS-related litigation.
Mortgage-Related Investigations and Litigation. The Attorney
General of Massachusetts filed an action against the Firm,
other servicers and a mortgage recording company,
asserting claims for various alleged wrongdoings relating to
mortgage assignments and use of the industry’s electronic
mortgage registry. In January 2015, the Firm entered into a
settlement resolving this action.
The Firm entered into a settlement resolving a putative
class action lawsuit relating to its filing of affidavits or other
documents in connection with mortgage foreclosure
proceedings, and the court granted final approval of the
settlement in January 2015.
One shareholder derivative action has been filed in New
York Supreme Court against the Firm’s Board of Directors
alleging that the Board failed to exercise adequate
oversight as to wrongful conduct by the Firm regarding
mortgage servicing. In December 2014, the court granted
defendants’ motion to dismiss the complaint.
The Civil Division of the United States Attorney’s Office for
the Southern District of New York is conducting an
investigation concerning the Firm’s compliance with the Fair
Housing Act (“FHA”) and Equal Credit Opportunity Act
(“ECOA”) in connection with its mortgage lending
practices. In addition, three municipalities and a school
district have commenced litigation against the Firm alleging
violations of an unfair competition law and of the FHA and
ECOA and seeking statutory damages for the unfair
competition claim, and, for the FHA and ECOA claims,
damages in the form of lost tax revenue and increased
municipal costs associated with foreclosed properties. The
court denied a motion to dismiss in one of the municipal
actions, the school district action was dismissed with
prejudice, another municipal action was recently served,
and motions to dismiss are pending in the remaining
actions.
JPMorgan Chase Bank, N.A. is responding to inquiries by the
Executive Office of the U.S. Bankruptcy Trustee and various
regional U.S. Bankruptcy Trustees relating to mortgage
payment change notices and escrow statements in
bankruptcy proceedings.