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A federal judge on Wednesday limited JPMorgan Chase & Co's potential liability to buy back soured mortgages tied to the main unit of Washington Mutual Inc, the savings and loan it bought at the height of the 2008 global financial crisis.

U.S. District Judge Rosemary Collyer in Washington, D.C. said the Federal Deposit Insurance Corp must shoulder some losses attributable to Washington Mutual's lending before the largest U.S. thrift was seized by the government in 2008, and immediately sold by the FDIC to JPMorgan for $1.9 billion.

In a two-page order, Collyer said JPMorgan assumed liability for disputed mortgages "only to the extent that Washington Mutual Bank reflected such liabilities at a stated book value" on its books as of Sept. 25, 2008, the day it was seized.

The FDIC, which was appointed Washington Mutual's receiver, had argued that JPMorgan assumed the bank's obligations "irrespective of a book value cap."

Collyer also ruled that JPMorgan did assume all mortgage repurchase liabilities of another unit it bought, Washington Mutual Mortgage Securities Corp.

The purchase of Washington Mutual helped make New York-based JPMorgan the largest U.S. bank by assets.

In a research note, CRT Capital analyst Kevin Starke said the decision could limit JPMorgan's obligations tied to the former Washington Mutual units to about $1.7 billion, including just $259 million at the main banking unit.

FDIC spokesman David Barr declined to comment. JPMorgan spokesman Brian Marchiony said the bank is pleased with Collyer's order.

The judge did not make public her decision explaining her reasoning. She directed the FDIC and JPMorgan to propose a redacted version to be made public by June 17.

Wednesday's decision does not affect JPMorgan's $13 billion settlement in November 2013 with the federal government over mortgage-related matters.

The decision could affect Deutsche Bank National Trust Co, which in 2009 brought a $10 billion lawsuit against the FDIC on behalf of trusts it oversees, and which held soured mortgage securities tied to Washington Mutual.

Clark estimated that the Washington Mutual receivership has only $2.75 billion of assets to cover $6.07 billion of claims by holders of the bank's senior notes, plus whatever claim Deutsche Bank is allowed.

Deutsche Bank spokeswoman Oksana Poltavets declined to comment.

The case is Deutsche Bank National Trust Co v. FDIC et al, U.S. District Court, District of Columbia, No. 09-01656.

http://www.reuters.com/article/2015/06/03/us-jpmorgan-washingtonmutual-idUSKBN0OJ2ZR20150603