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JPMorgan, Ally Sued by HSH Nordbank

By Marlene Y. Satter

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German lender HSH Nordbank is suing JPMorgan Chase and Ally Financial, among other financial institutions, over losses it sustained in mortgage bonds that it said were misrepresented.

Bloomberg reported that in its suit filed Thursday in New York Supreme Court, HSH Nordbank said offering documents for the securities contained “material misrepresentations and omissions” about the loans backing the securities.

In three separate cases totaling $293 million in losses over mortgage bonds, the German lender, based in Hamburg, has said that wrongdoing by JPMorgan, Ally, Barclays Capital, Credit Suisse Securities (USA) and others “led directly” to losses on the securities, according to court papers.

The bank also alleges that the offering materials held misrepresentations about the legal validity of assignments of loans to mortgage-securitization trusts, as well as the rights of those trusts to receive interest and principal payments on the loans, which are used to pay investors.

The cases are HSH Nordbank AG v. Ally Financial Inc., 653651-2011, HSH Nordbank AG v. JPMorgan Chase & Co., 653656-2011, and HSH Nordbank AG v. Barclays Bank Plc, 653652-2011, New York State Supreme Court (Manhattan). One case is for $130 million in mortgage securities; another is for $117 million in bonds, with a third focusing on $46 million.