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Ambac revives JPMorgan mortgage lawsuit

NEW YORK (Reuters) - Bankrupt bond insurer Ambac Financial Group Inc <ABKFQ.PK> has filed new legal claims stemming from its insurance of Bear Stearns mortgage-backed securities, after another court dismissed the case.

Ambac sued JPMorgan Chase & Co <JPM.N>, which bought Bear Stearns and its EMC Mortgage business in early 2008. The lawsuit, brought in a New York state court on Thursday, contends that Bear Stearns misled Ambac into insuring bad pools of mortgage-backed securities.

The lawsuit revives a lawsuit lodged in federal court that was dismissed last week by a judge who said he lacked jurisdiction. Ambac contends that Bear Stearns recklessly packaged bad loans into insured securities and that Bear's acquirer, JPMorgan, failed to honor a variety of contractual promises.

"Ambac is a large, sophisticated insurance company that is trying to blame others for risks it knowingly took and was paid for taking. We do not believe Ambac's claims are meritorious and intend to defend Bear vigorously," JPMorgan said in a statement.

Ambac, which had been the second-largest U.S. bond insurer, filed for bankruptcy last November after being crushed by losses on mortgage bonds.

The lawsuit in part concerns whether EMC, which securitized some mortgage loans that went bad, pocketed money from originators to address "early payment defaults" rather then apply it as intended toward the bonds backed by the loans.

Ambac said that by doing so, Bear exposed it to more potential losses by virtue of its having insured those bonds.

In the lawsuit, Ambac said it has paid out more than $641 million in claims on just four transactions. It is seeking damages including all of the claims payments it has made and may make in the future.

The case is Ambac Assurance Corp. vs. EMC Mortgage Corp and J.P. Morgan Securities Inc, New York State Supreme Court, New York County, No. 650421/2011.

(Reporting by Jonathan Stempel, Clare Baldwin and Ben Berkowitz; Editing by Steve Orlofsky and Richard Chang)

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