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Allstate Sues JPMorgan

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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.