In a conference call in July on JPMorgan's second-quarter results, Chief Financial Officer Doug Braunstein told banking analysts that JPMorgan had reached "an inflection point" on mortgage repurchase claims by investors alleging that the bank and its acquirees, Washington Mutual and Bear Stearns, breached representations and warranties about the loans underlying mortgage-backed securities. JPMorgan has paid out $3.4 billion in reps and warranties claims, Braunstein said, but decided to reduce reserves going forward by $215 million, in anticipation of a third-quarter "net repurchase number" of "approximately zero."

I'm not sure exactly how to interpret Braunstein's comment, since it's not clear to me what's packed into JPMorgan's "net repurchase number"; MBS issuers often assert their own put-back claims against mortgage originators, for instance. But JPMorgan still has an enormous put-back claim by a group of major institutional investors in almost $100 billion of mortgage-backed notes hanging over its head. And lately, the MBS headlines have all been about repurchase claims against JPMorgan. I've said it before: Bank of America's MBS woes are so 2011. These days, at least when it comes to private-label litigation, it's all about JPMorgan.

I told you last week about the hedge fund Baupost's put-back case against JPMorgan's EMC unit in Delaware Chancery Court -- one of the very few cases in which a private investor (as opposed to a bond insurer or government-sponsored entity) has successfully forced an MBS trustee to assert claims on its behalf. But the bond insurers have been busy as well. MBIA filed a new suit against JPMorgan last Friday in federal court in White Plains, New York, claim in g that its predecessor Bear Stearns fraudulently induced MBIA to insure a GMAC securitization. (Okay, it's not a put-back suit, but the claims, as described by MBIA's lawyers at Quinn Emanuel Urquhart & Sullivan, are similar.)

Meanwhile, the bond insurer Ambac and its indefatigable counsel from Patterson Belknap Webb & Tyler are rocketing along in Ambac's sweeping fraud and put-back case against Bear Stearns and its onetime mortgage arm, EMC Mortgage. As the financial writer Teri Buhl was the first to report at her website, last month Ambac brought an action in Connecticut state court seeking to compel the loan reviewer Clayton Financial to produce the Bear MBS documents Ambac has subpoenaed. Clayton was one of the companies (along with Watterson Prime) frequently hired by MBS issuers to re-underwrite loans they purchased from mortgage originators to assess the mortgages' quality before they were securitized. Clayton has been thoroughly scrutinized in the mortgage mess, by former New York attorney general Andrew Cuomo and the Senate's permanent subcommittee on investigations, among others. So it's not news that the company has loan-level information that could support bond insurer claims that Bear bundled deficient mortgages into MBS trusts. But the Patterson Belknap filing included excerpts of deposition testimony from a whistle-blower who worked at both Clayton and Watterson. Like the recently filed, amended Baupost complaint, the whistle-blower deposition excerpts are another example of actual evidence that the due diligence and underwriting shenanigans you see described in complaints against MBS defendants really happened.

The Ambac-deposed whistle-blower testified, for example, that team leaders at both Clayton and Watterson told loan reviewers to ignore most of the problems -- even signs of fraud -- they spotted in the files. "Usually they would say, 'Hey, the client is ... going to ignore that,' or 'That's not a big concern and (the client) will take care of that,'" the witness testified. Or when reviewers found deficiencies that couldn't be ignored, the whistle-blower said, they were often instructed to find "compensating factors" and approve the loan for securitization. Sometimes, the witness said, he would go back to loans he had graded as defective and find that, overnight, they'd been re-graded as acceptable. "Any time we did a Bear Stearns job it was pretty much we just (entered) data into the system, like 'Bear don't care.' You know, that was like the little slogan that they used to just basically throw around," the witness said.

Ambac wants to see documents that would back the whistle-blowers' assertions, such as a now-obsolete Clayton database in which loan reviewers entered their findings and emails documenting Clayton's directions from Bear Stearns. Clayton counsel Marc Rothenberg of Blank Rome declined comment on behalf of his client.

Unlike last year's MBS pinup, Bank of America, JPMorgan has been extremely reluctant to settle MBS claims by private investors (although earlier this month it did cough up $26 million to settle a WaMu MBS class action). But I believe the bank may be engaged in talks with the aforementioned institutional investor group that could produce a global MBS put-back settlement akin to BofA's proposed $8.5 billion deal with Countrywide MBS noteholders.

And here's why. You probably remember that the investors who sent a demand letter to JPMorgan, Bear and WaMu MBS trustees also sent similar letters to Morgan Stanley and Wells Fargo trustees. Last month I noted that it's been quite a while since those letters went out and speculated that the silence that has followed the demand letters probably means settlement talks are under way between the banks and Gibbs & Bruns, which represents the investor group. On Wednesday, more than nine months after the investor group first notified Morgan Stanley of alleged deficiencies, Gibbs & Bruns took the next step toward filing put-back suits against Morgan Stanley and Wells Fargo, issuing a formal notice of deficiency covering more than $5 billion in Morgan Stanley mortgage-backed notes and more than $15 billion in Wells Fargo MBS trusts in which the investors hold the requisite voting rights. When Gibbs & Bruns issued a similar notice of deficiency against BofA back in 2010, the bank finally agreed to engage in the talks that led to the proposed $8.5 billion settlement.

A press release Gibbs & Bruns issued on Wednesday does not mention JPMorgan, which suggests to me that the firm's institutional investor clients don't think they need to prod JPMorgan with another threatening notice. Kathy Patrick of Gibbs wouldn't comment on my theory, saying only that "as a matter of practice, we do not comment on either the existence or substance of any settlement discussions with any banks." And a JPMorgan spokesman didn't return my call for this story. So I could certainly be wrong. But sometimes absence speaks loudly. I'm guessing this is one of those times.

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