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Biden Secures Nearly $20 Million for Delaware

Date Posted: Tuesday, November 19th, 2013
Categories:  Civil Department of Justice Fraud Press Releases

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JPMorgan Chase will compensate State for selling mortgage-backed securities that were central to economic crisis; Biden says “we will continue to seek accountability”

 

Wilmington – In the latest effort by his office to hold accountable those responsible for the mortgage foreclosure crisis, Delaware Attorney General Beau Biden announced that JPMorgan Chase will pay $19.7 million to settle allegations stemming from conduct that helped cause the greatest economic downturn since the Great Depression.

 

Tuesday’s settlement is part of a global agreement that JPMorgan also reached today with the U.S. Department of Justice and four other states resolving allegations concerning the bundling and sale of mortgages to investors. The investments – bought by pension funds, mutual funds and other investors – were much riskier than advertised. The resulting losses were catastrophic for the economy.

 

“Our financial system only works when everyone plays by the rules,” Biden said. “As a result of our coordinated investigations, we are holding accountable one of the financial institutions that broke the rules and helped cause the economic crisis that brought our nation to its knees.  Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”

 

Delaware’s $19.7 million will be used to compensate a variety of state entities for their losses on these investments and to fund further efforts to help Delawareans emerge from the financial crisis, strengthen Delaware’s communities and alleviate other harm caused by the financial crisis.

 

The Delaware settlement resolved a joint investigation by Biden’s Fraud Division and Massachusetts Attorney General Martha Coakley’s Insurance and Financial Services Division that examined JPMorgan’s conduct when issuing mortgage-backed securities. The federal investigation was led by the U.S. Department of Justice’s Residential Mortgage-Backed Securities Working Group, under the leadership of Associate U.S. Attorney General Tony West and New York Attorney General Eric Schneiderman. Biden, also a member of the RMBS Working Group, thanked West and Schneiderman for their leadership.

 

Tuesday’s settlement is Biden’s latest enforcement action in response to the mortgage foreclosure crisis. His office has been a national leader in seeking accountability for the crisis and helping homeowners.

 

“As a prosecutor and a consumer protector, I have an obligation to hold those responsible for causing the crisis accountable – and that work is not done,” Biden said.

 

Recent actions by Biden and his office include:

 

  • In February 2012, Biden, 48 of his colleagues and the federal government signed a $25 billion settlement with the nation’s five largest mortgage-servicing banks (including JPMorgan). That settlement brought $11.7 million to the State and has, so far, meant $75 million in financial benefits to 3,000 Delawareans. It also included important new protections for America’s military personnel that Biden fought to include in the settlement.

 

  • In July 2012, Biden secured important operational reforms from MERS – a national shadow mortgage registry at the heart of the mortgage crisis – in a settlement of a lawsuit he filed the year before. MERS’ inaccurate and unreliable records made it difficult if not impossible for homeowners to determine which financial institution owned their mortgage.

 

  • In October 2012, Biden announced that an investigation by his office into allegations of “robo-signing” and other improper mortgage services provided by subsidiaries of Lender Processing Services, Inc. (LPS) led to the Florida-based company paying $250,000 to the State of Delaware.

 

  • In January 2013, Biden, 12 of his colleagues and the federal government filed separate suits against Standard & Poor’s, charging the rating agency with violating state law by misrepresenting that its evaluations of mortgage-backed securities were fair and impartial when actually S&P made decisions based on its own financial interests. That suit is still pending.

 

This matter was handled for Delaware by Fraud Division Director Matthew Lintner, Investor Protection Director Owen Lefkon, Assistant Attorney General David Casler, and Paralegal Debra Szymurski.

 

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