Reuters: Bankruptcy News: Former WaMu units reach $26 mln settlement in mortgage securities case

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Former WaMu units reach $26 mln settlement in mortgage securities case Sep 5th 2012, 03:45 NEW YORK, Sept 4 | Tue Sep 4, 2012 11:45pm EDT NEW YORK, Sept 4 (Reuters) - Two former Washington Mutual Bank units have reached a $26 million settlement agreement over claims they misled investors over the sale of mortgage-backed securities. Lawyers for plaintiffs filed a notice of the settlement on Monday in U.S. federal court in Seattle, averting a trial that was scheduled to begin on Sept. 17. The lawsuit alleged that registration documents filed in connection to the securities failed to accurately describe WaMu's underwriting practices. The settlement falls well short of the $558 million damages estimate made by an expert for the plaintiffs in court filings. "While this settlement by no means compensates investors for the full amount of their damages, we believe it is a good result given the bankruptcy of WaMu and limited funds available," said Steve Toll, an attorney for the plaintiffs. Lawyers for the former WaMu units did not immediately return messages seeking comment. The settling WaMu defendants are WaMu Asset Acceptance Corp and WaMu Capital Corp. Washington Mutual Inc filed for bankruptcy on Sept. 26, 2008. JPMorgan bought Washington Mutual's banking operations in a $1.88 billion transaction arranged by the FDIC. The case is In Re Washington Mutual Mortgage-Backed Securities Litigation, 09-00037.

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