More Possible Lawsuits Haunt Banks
More lawsuits are threatening to be filed against banks and mortgage firms for alleged paperwork irregularities done on thousands of foreclosures.
JPMorgan is facing two possible class suits for its alleged fraud, misrepresentation and violation of various state consumer fraud statutes. It, however, declined to identify the plaintiffs.
Since the joint probe by state and federal officials have begun to investigate anomalies on thousands of foreclosure paperworks, banks and mortgage firms have been facing lawsuits from both their borrowers and investors.
Cambridge Place Investment Agency had already sued Ally Financial and had engaged in a legal fight with Wall Street in an effort to recover its investments on subprime mortgages.
PNC Financial Services is also being sued by the Federal Home Loan Bank of Chicago, which alleged that the former had committed misrepresentations and omissions in its sale of mortgage-backed securities investments.
Meanwhile, in an effort to curb the publicís negative perception, banks and financial institutions like Bank of America, JP Morgan and GMAC Mortgage have all voluntarily imposed and implemented foreclosure moratoriums in several states. Goldman Sachs is currently reviewing its loan servicerís practices and had temporarily suspended evictions.
All fifty state attorneys general have formed an investigating committee to determine the liability of banks vis-ŗ-vis allegations of improper foreclosure filings and unwarranted evictions.
JP Morgan had since reiterated that the information and quarterly report it filed with the SEC is complete and accurate in all material respects.
A Chicago homeowner had filed an action in the federal court for the Northern District of Illinois, alleging that Wall Street banks have connived to illegally foreclose their homes. Kentucky homeowners have also filed a class suit against banks for reducing their home equity lines.
These developments may be causing the market some serious financial effects as the KBW index showed that bank stocks slipped 1.3 percent in the afternoon trading with JPMorgan shares dipping 0.9 percent. PNC and Goldman Sachs shares also fell 1.9 and 0.8 percent, respectively.
Nine separate individual actions have also been filed by the Federal Home Loan Banks of Pittsburgh, San Francisco, Chicago and Indianapolis in various state courts against several banks with JPMorgan as parent respondent. PNC is also facing a suit over $345 million worth of mortgage-backed securities.
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