Ambac Financial Group, the bond insurer that last month won court approval to emerge from bankruptcy protection, has sued JPMorgan Chase to recover losses on mortgage securities that it insured and were made by the former Bear Stearns.  Ambac entered into bankrupt in November 2010, and 3/14/12 it won court approval to emerge. Ambac claims it has incurred over $200 million of claims on 7 residential mortgage-backed securities (RMBS) transactions dating from 2006 that Bear fraudulently induced it to enter, and which collectively have lost $1.8 billion. In its complaint, AMBAC makes the following claims:

• the transactions "have failed miserably," with the rate of default or severe delinquency on the underlying loans ranging from 41.4% to 61.7%.
• "Driven by management's 'Bear don't care' mentality, Bear Stearns perpetrated a massive fraud that deceived investors and financial guarantors, such as Ambac, into believing that the mortgage loans backing its securitizations were originated pursuant to established underwriting guidelines and were therefore of good quality."

JPMorgan had no immediate comment.  The lawsuit is the 2nd filed by Ambac in the NYS Supreme Court to arise from activities at Bear and its EMC Mortgage unit.  Assured Guaranty, a bond insurer backed by the billionaire Wilbur Ross, has filed a similar lawsuit against the largest U.S. bank. JPMorgan bought Bear in May 2008 in a buyout brokered by the U.S. Federal Reserve . Both are among the many large banks accused in lawsuits or by regulators of misconduct in the creation and marketing of mortgage-backed securities. On Feb. 29, JPMorgan said U.S. Securities and Exchange Commission staff was mulling civil charges or administrative proceedings in two mortgage probes. It said one probe involved due diligence and disclosures for two mortgage-backed securitizations, and the other involved loans used in mortgage securities created by Bear. The case is Ambac Assurance Corp et al v. EMC Mortgage LLC et al, NYS Supreme Court, New York County. Click for referenced story:  [CNBC, 4/2/12].