EMC Mortgage Sued Over Soured 2006 Loans

EMC Mortgage Sued Over Soured 2006 Loans EMC Mortgage, a unit of JPMorgan Chase, has been sued by SACO I Trust 2006-5 for an alleged breach of contract.

According to a Bloomberg News report, the trust financed the purchase of EMC Mortgage's residential home loans by issuing certificates that were to be repaid with interest from the loans. The trust, which owned 13,156 loans at the time of the April 2006 financing agreement, issued about $667.3 million in certificates. However, the trust says that it has lost about $356 million from the agreement, and it is seeking damages of at least $293 million plus interest.

‘The plaintiff has been informed by certain investors who are owners of certificates of numerous breaches of representations and warranties made by EMC that relate to the quality of the loans,’ says the trust in its court filing. ‘EMC has filed to cure those breaches or repurchase the loans, as it is obligated to do pursuant to terms of the agreement.’

JPMorgan purchased EMC Mortgage's parent entity, Bear Stearns Cos., in 2008. A spokesperson for the bank did not respond to a request for comment on the lawsuit.


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