April 2 (Bloomberg) -- Ambac Assurance Corp. sued JPMorgan Chase & Co., accusing the company’s EMC Mortgage and Bear Stearns units of fraud and breach of contract over the sale of mortgage-backed securities.
The lawsuit is the second filed in New York State Supreme by the insurer against JPMorgan Chase & Co. over the investments, a central part of the housing bubble that helped push the U.S. into the biggest recession since the 1930s. Ambac sued the New York-based bank in February 2011, claiming it was fraudulently induced to participate in the investments.
“The securitization transaction and loans at issue in this action are different, but the story is the same,” lawyers for Ambac said in the most recent lawsuit, filed on March 30. “The loans involved in the transactions at issue in this case are plagued by the same pervasive defects found in the transactions at issue in Ambac’s original action against Bear Stearns.”
The bond insurer said in the lawsuit that it has had to pay more than $200 million in claims as of Feb. 29 because of the failed investments.
Jennifer Zuccarelli, a JPMorgan spokeswoman, didn’t immediately respond to an e-mail seeking comment on the suit.
Ambac Assurance was the second-largest bond insurer before the 2008 financial crisis, when mounting defaults on mortgages swamped the company with claims. It guaranteed about $256 billion of $1.4 trillion in insured municipal debt, according to data compiled by Bloomberg.
A U.S. bankruptcy judge in Manhattan on March 15 approved a plan to reorganize the $1.7 billion in debt of New York-based Ambac Financial Group Inc., the bankrupt holding company for Ambac Assurance.
EMC Mortgage was a unit of Bear Stearns Cos. until the investment bank was bought by JPMorgan in 2008.
The cases are Ambac Assurance v. EMC Mortgage, 651013/2012 and 650421/2011, New York state Supreme Court (Manhattan).
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