JPMorgan & Co. can put another related-to-mortgage fraud behind it. The company announced yesterday that it will pay $18.3 million to settle claims that its subsidiary Bear Stearns failed to disclose the actual interest rates on its adjustable-rate mortgage (ARM) documents.
A judge is scheduled to approve the agreement on Oct. 7. This settlement is one of several JPMorgan is agreeing to with regard to ARMs.
The case dates back to 2007, when plaintiffs who took ARM loans through Bear Stearns claimed that EMC Mortgage Corp., the unit of Bear Stearns that approved the loans, failed to inform them about the percentage the interest rate would be adjusted to. As a result, many homeowner’s mortgages skyrocketed; they were unable to make payments and many lost their homes to foreclosure.
As part of the settlement, JPMorgan—which took over Bear Stearns amid the financial crisis in 2008—denies any wrongdoing.
While JPMorgan has declined comment about the settlement in the media, the plaintiffs’ lawyer said he was happy with the outcome.
"I'm happy with the settlement, and I think given the risk to reward, people are going to be pleased," Jeffrey Berns, of Berns Weiss, told Reuters.
JPMorgan is currently working toward settling many of its suits related to ARMs. "All these cases are starting to resolve after six years of litigation," Berns said.
Read more about this story on Huffington Post.
For more recent InsideCounsel stories related to the financial industry, see: