Sealink sues JPMorgan, BofA over billions of RMBS
Sealink Funding Limited filed multibillion-dollar lawsuits against Bank of America (BAC) and JPMorgan Chase (JPM), claiming the firms sold residential mortgage-backed securities that contained poorly underwritten mortgages. The company sued JPMorgan over $2.4 billion of RMBS purchased in 2005 through 2007. Sealink also sued BofA for $1.6 billion of RMBS acquired in 30 offerings between 2005 and 2007 from Countrywide Financial. The lawsuits were filed in the New York State Supreme Court. Bank of America responding the suit saying, "This appears to be another sophisticated investor looking for someone to blame for investment losses suffered due to a downturn in the economy. We will vigorously defend this lawsuit." "Contrary to the statements in the offering materials and other communications by defendants used to solicit Sealink's investment in the RMBS, the originators whose loans served as collateral for Sealink's investments routinely and egregiously violated their stated underwriting guidelines," Sealink claims. "As a result, the mortgages they originated and sold to defendants for securitization presented a materially higher risk to investors than represented by defendants in the offering materials." Sealink claims it later discovered "the originators whose loans collateralized the defendants' RMBS purchased by Sealink did not employ rigid underwriting processes and were among the worst culprits in the subprime lending industry." Bank of America and JPMorgan weren't immediately available to comment. Sealink Funding is an Irish firm overseeing the RMBS assets of Germany's Landesbank Sachsen AG. Write to Kerri Panchuk.