Committee on Finance
ORDINANCE
WHEREAS, on November 19, 2013, affiliates of JPMorgan Chase & Co. and the U.S. Justice Department reached a record $13 billion civil settlement related to JPMorgan's mortgage security business activities; and
WHEREAS, between 2005 and 2007, JPMorgan purchased loans for the purpose of packaging and selling residential mortgage-backed securities; and
WHEREAS, before purchasing loans from third parties, employees at JPMorgan conducted due diligence to confirm, among other things, that the loans complied with the originator's underwriting guidelines; and
WHEREAS, through that due diligence process, JPMorgan employees were infonned by due diligence vendors that a number of the loans included in at least some of the loan pools that it purchased, and subsequently securitized, did not comply with the originators' underwriting guidelines, and, in the vendor's judgment, did not have sufficient compensating factors, and that a number of the properties securing the loans had appraised values that were higher than the values derived in due diligence testing from automated valuation models, broker price opinions or other valuation due diligence methods; and
WHEREAS, JPMorgan represented to investors in various offering documents that loans in the securitized pools were originated generally in conformity with the loan originator's underwriting guidelines, and that exceptions were made based on compensating factors determined after careful consideration on a case-by-case basis; and
WHEREAS, the offering documents further represented, with respect to representations and warranties made to JPMorgan by sellers and originators of the loans, that JPMorgan would not include any loan in a pool being securitized if anything has come to JPMorgan's attention that would cause it to believe that the representations and warranties of a seller or originator would not be accurate and complete in all material respects; and
WHEREAS, notwithstanding these repr...
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