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Investments

Syncora settles RMBS claims with JPMorgan

Bank will pay around $400 million in cash

Scales of justice
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Syncora Holdings today announced that its wholly owned, New York financial guarantee insurance subsidiary, Syncora Guarantee, settled its residential mortgage-backed securitization related claims with JPMorgan Chase (JPM).

Syncora is to receive a cash settlement, estimated to be around $400 million.

However, the settlement from JPM does not make Syncora whole.

The Bermuda-based company is struggling in the current operating environment.

"Despite these developments and the change in the going concern assessment, the Company continues to face significant risks and uncertainties as described in the Company's financial statements," Syncora said in a statement.

According to coverage in Reuters, "home loans such as those issued by the Bear Stearns 'securitization machine,' as the bond insurer's lawsuits have called it, were at the center of the financial crisis. As the loans became delinquent, mortgage-backed securities collapsed, helping to trigger a wider market meltdown."

JPM took over Bear Stearns as the firm imploded due to risky RMBS deals. It also took on legacy liabilities and is now facing massive legal costs.

Reuters adds, the cases are Syncora Guarantee v. EMC Mortgage Corp, U.S. District Court for the Southern District of New York, No. 09-cv-3106; and Syncora Guarantee v. JPMorgan Securities, Syncora Guarantee v. EMC Mortgage, and Syncora Guarantee v. EMC Mortgage, New York state Supreme Court, New York County, Case Nos. 651566/2011, 650420/2012 and 653519/2012.

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