• 16 Feb 2011 at 2:00 PM

Allstate Sues JPMorgan

By Bess Levin

Over $700 million in residential mortgage-backed securities.

In the suit, filed Tuesday in New York state court, Allstate alleges J.P. Morgan and its various entities sold Allstate a “toxic mix of loans given to borrowers that could not afford the properties” all the while telling Allstate it was buying a safe security…Allstate alleges it bought pass-through certificates into the securities on the basis of “material misrepresentations and omissions” by J.P. Morgan about the riskiness of the securities.

“For instance, recent reviews of the loan files underlying some of Allstate’s certificates reveal a pervasive lack of proper documentation, facially absurd (yet unchecked) claims about the borrower’s purported income, and the routine disregard of purported underwriting guidelines,” the suit reads. The suit alleges fraud and negligent misrepresentation and seeks damages for Allstate’s losses along with other fees.

[WSJ]

Comments (24)

  1. 1
    Posted by Geico_Gecko | February 16, 2011 at 7:56 PM

    Hindsight is 20/20! No do-overs mate!

  2. 2
    Posted by GGGuest | February 16, 2011 at 8:14 PM

    I believe the technical term is “no givesies backsies”

  3. 3
    Posted by Fine Print | February 16, 2011 at 8:20 PM

    “The freedom we enjoy, the freedom we earn everyday is the very thing that will defeat our enemies and keep us strong.”

    –Dennis Haysbert as David Palmer…24

  4. 4
    Posted by Fine Print | February 16, 2011 at 8:20 PM

    “The freedom we enjoy, the freedom we earn everyday is the very thing that will defeat our enemies and keep us strong.”

    –Dennis Haysbert as David Palmer…24

  5. 5
    Posted by Fine Print | February 16, 2011 at 8:20 PM

    “The freedom we enjoy, the freedom we earn everyday is the very thing that will defeat our enemies and keep us strong.”

    –Dennis Haysbert as David Palmer…24

  6. 6
    Posted by guest | February 16, 2011 at 8:30 PM

    I’m a hotshot portfolio manager. I just purchased a boatload of AAA rated mortgage backed securities after a night of hookers and blow.

    Lehman brothers goes belly up. That AAA rating you based your entire buy-side decision on becomes worthless, like your portfolio of securities. Your cutrate monoline insurer won’t cover your losses either. I sue the guy that sold them to me because that’s what I do.

    Protect yourself from Mayhem.

  7. 7
    Posted by Pfluger the Barbarian | February 16, 2011 at 8:32 PM

    The Good Hands People should not simply have relied on the Rating Factories when making a purchase decision. They should have realized that these CDOs and RMBS “are things that might be bullshit.” I love that tag…..

  8. 8
    Posted by Nouveau Richie | February 16, 2011 at 8:33 PM

    Looks like they weren’t in good hands…

  9. 9
    Posted by guest | February 16, 2011 at 8:34 PM

    I’ll give a dollar to anyone who can explain to me how that can be done.

    -Former believer in catchy jingoistic slogans

  10. 10
    Posted by M1 | February 16, 2011 at 8:39 PM

    That’s where you messed up, you DIVIDE the stated income % by the verified income % to get your credit enhancement, not multiply.

    -AIG quant

  11. 11
    Posted by CT_Hedgefundmanager | February 16, 2011 at 8:40 PM

    $700 million? Wtf, isn’t that like only 20 houses?

  12. 12
    Posted by JBev | February 16, 2011 at 8:41 PM

    awesome

  13. 13
    Posted by Pfluger the Barbarian | February 16, 2011 at 8:42 PM

    Hell, any informed investor should always approach any product, especially a structured product, manufactued by Wall Street, as “a thing that might be bullshit.” Same for the ratings procured for said product…..

  14. 14
    Posted by Charlie S | February 16, 2011 at 9:09 PM

    Face it, some people can’t handle that sort of thing socially.

  15. 15
    Posted by Charlie S | February 16, 2011 at 9:09 PM

    Face it, some people can’t handle that sort of thing socially.

  16. 16
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  17. 17
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  18. 18
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  19. 19
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  20. 20
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  21. 21
    Posted by Guest | February 16, 2011 at 9:28 PM

    Allstate’s new tag line?

  22. 22
    Posted by Oral_yst | February 16, 2011 at 10:10 PM

    kill yourself

  23. 23
    Posted by Jizz'n water bottles | February 16, 2011 at 10:34 PM

    fyi allstate is not monoline

    -Mayhem

  24. 24
    Posted by Guest | February 17, 2011 at 5:23 AM

    That’s what makes it so funny.

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