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Lawyers Seek $85M in Fees in $4.5B JP Morgan RMBS Settlement

November 18, 2013 | Posted in : Contingency Fees / POF, Fee Request

A recent BLT blog post, “JP Morgan Settles Securities Claims for $4.5 Billion,” reports that JP Morgan Chase has reached a $4.5 billion deal to settle claims by 21 institutional investors, agreeing to repurchase faulty residential mortgage-back securities (RMBS).  The investors, which include Black Rock Financial Management, Goldman Sachs Asset Management and the Prudential Insurance Co. of America, alleged that some of the mortgages included in the pools did not meet underwriting standards.

Houston-based Gibbs & Burns was lead counsel for the investors.  Its attorney fees will be in addition to the settlement amount, according to the law firm.  The 32-lawyer firm also represented investors in an $8.5 billion settlement with Bank of America and Countrywide in 2011, receiving $85 million in attorney fees.  Lawyers who worked on the JP Morgan deal include Kathy Patrick (dubbed “The Woman Wall Street Fears Most” by Forbes), Scott Humphries, Robert Madden, and David Sheeren, according to the law firm’s new release.

The trustees of 330 mortgage-backed securities issued by JP Morgan have until Jan. 15 to accept the settlement offer.  The investors “support the agreement and have asked the Trustees to accept it,” according to Gibbs & Burns.

The claims stem from the representations and warranties of the securities, which the bank agreed to buy back the loans of they didn’t meet the standards described.  The deal also includes claims related to mortgage servicing.  The $4.5 billion settlement is not part of a larger deal that that the bank is negotiating with the government.  On Oct. 25, JP Morgan resolved some claims, agreeing to pay Fannie Mae and Freddie Mac $5.1 billion for similar repurchase obligations.