June 19 (Reuters) – A federal judge ruled against JPMorgan
Chase & Co in a lawsuit seeking to hold it responsible
for losses that a bond insurer claimed to suffer by insuring
securities backed by thousands of home equity loans.
U.S. District Judge Paul Crotty said on Tuesday the insurer,
Syncora Guarantee Inc, need not prove that alleged warranty
breaches by JPMorgan’s EMC Mortgage Corp unit caused the
underlying loans to default in order to trigger EMC’s repurchase
obligations.
He also said Syncora can show a material breach of contract
by establishing that EMC’s alleged breaches of representations
and warranties caused a material increase in risk.
Syncora had alleged that as a result of EMC’s breaches, it
had paid out more than $168.6 million of claims over securities
backed by 9,871 home equity loans. EMC had been part of Bear
Stearns Cos, which JPMorgan bought in 2008.
