By Nermeen Nabil Khear 
Two of the largest banks in the US are reportedly locked in a legal battle over a $481 million commercial property loan.
Wells Fargo is suing JPMorgan Chase, the largest back in the US, over accusations it greenlighted a real estate loan even though it allegedly knew that the financial statements were fraudulent, reports Reuters.
In 2019, JPMorgan issued a loan to real estate development and investment firm Chetrit Group to finance the purchase of 43 multi-family buildings with 8,671 apartments across 10 states.
Acting as the investors’ trustee, Wells Fargo alleges that JPMorgan and Chetrit knew that the sellers had fraudulently inflated the buildings’ historical net operating income by 25% even before closing the deal at $522 million.
A property’s historical net income is a financial metric that measures the income generated by a building over a specific time frame. A property’s past earnings are typically used to assess its potential value.
Wells Fargo claims that JPMorgan approved the overvalued property deal to reap millions of dollars in fees, thinking that the assets would eventually be dumped on investors who wouldn’t realize the buildings were not as profitable as declared on paper.
Chetrit’s loan turned sour in 2022 and, in the process, Wells Fargo says investors in the trust have lost tens of millions of dollars.
“[JPMorgan] had an obligation to engage in due inquiry to determine the scope of the fraudulent reporting. Instead, [JPMorgan] plowed ahead as if nothing unusual had happened without even bothering to correct known errors in the numbers.”
Wells Fargo is asking the court to order JPMorgan to either pay for damages or repurchase the loan and make the investors whole.
JPMorgan and Chetrit have not yet issued a statement regarding the case.
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The post Wells Fargo Sues JPMorgan Chase Over Soured $481,000,000 Loan, Says US Bank Aware Seller Had Inflated Income: Report appeared first on The Daily Hodl.
Two of the largest banks in the US are reportedly locked in a legal battle over a $481 million commercial property loan. Wells Fargo is suing JPMorgan Chase, the largest back in the US, over accusations it greenlighted a real estate loan even though it allegedly knew that the financial statements were fraudulent, reports Reuters.
The post Wells Fargo Sues JPMorgan Chase Over Soured $481,000,000 Loan, Says US Bank Aware Seller Had Inflated Income: Report appeared first on The Daily Hodl. Financeflux, bank, banks, JPMorgan, JPMorgan Chase, News, US Bank, US banks, wells fargo
This articles is written by : Nermeen Nabil Khear Abdelmalak
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