JPMorgan Chase & Co. (JPM) has settled yet another lawsuit pertaining to its legacy mortgage issue. The company will pay $400 million to Syncora Guarantee Inc., a wholly owned subsidiary of Syncora Holdings Ltd., to resolve the case pertaining to losses incurred in the securitized mortgage deal.
Though the settlement deal was announced early last week, the amount was revealed in Syncora Guarantee’s annual statement filed on Feb 28. JPMorgan was accused of misrepresenting facts about the equity home loans underlying the bonds, which Syncora had insured.
Notably, the securities insured by Syncora originated from Bear Stearns Co. that was acquired by JPMorgan in 2008.
The Syncora deal comes on the heels of several other settlements announced by JPMorgan over the past one year. The company has been trying hard to do away with all legacy mortgage-related issues plaguing it.
In Nov 2013, JPMorgan announced a $13 billion deal with Federal authorities. Further, the company agreed to pay $4.5 billion to settle claims by institutional investors who incurred losses from investments in mortgage-backed securities that failed during the financial crisis.
Due to the settlement of such cases, JPMorgan’s 2013 results suffered. Though the company’s position remained decent, a significant rise in legal reserve weighed on its financials.
Though JPMorgan has resolved many litigation issues, it still faces investigations from certain federal agencies and foreign governments. Hence, a rise in legal expenses is a concern in the near future.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). Some better-ranked major regional banks include BB&T Corp. (BBT), Fifth Third Bancorp (FITB) and The PNC Financial Services Group, Inc. (PNC). All these stocks have a Zacks Rank #2 (Buy).
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