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Chase Discloses Investigation by DOJ's Criminal Division

Subprime, Alt-A RMBS at issue

Aug. 8, 2013

By Mortgage Daily staff

Among multiple matters facing JPMorgan Chase & Co. that are related to residential mortgage-backed securities is an investigation by the criminal division of the U.S. Department of Justice. The financial services giant is also dealing with alleged activity on whole-loan transactions.

The New York-based company made the disclosure in a filing with the Securities and Exchange Commission on Wednesday.

At issue are subprime and Alt-A RMBS transactions that were securitized and sold by Chase and some of its subsidiaries, according to the SEC filing.

Chase said it is responding to parallel investigations being conducted by the civil and criminal divisions of the U.S. Attorney's Office for the Eastern District of California.

The filing indicated that a notice received in May from the civil division said that the government has preliminarily concluded that Chase violated federal securities laws on offerings in 2005 and 2007.

Chase also noted that it has responded to a number of subpoenas and informal requests for information received from other federal and state authorities concerning mortgage-related matters.

Those matters involve "a number of transactions involving the firm and its affiliates' origination and purchase of whole loans, underwriting, issuance and trading of MBS, treatment of early payment defaults, potential breaches of securitization representations and warranties, reserves and due diligence in connection with securitizations."

Chase said that it continues to respond to other MBS-related regulatory inquiries.

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