Documents filed in federal court in Manhattan Feb. 5 alleged that JPMorgan failed to disclose information on “faulty” home appraisals and overextended borrowers when selling mortgage-backed securities, The New York Times reported. The bank allegedly hid problems so as to make loans appear healthier than they actually were.

The suit was filed by the Belgian-French bank, Dexia, which alleged it was duped into buying some $1.6 billion in troubled MBS. Dexia cites MBS it purchased involving mortgages originated by Bear Stearns and Washington Mutual, two firms JPMorgan acquired in the wake of the financial meltdown.

Dexia lost $774 million in MBS, the Times reported, and has been bailed out twice since 2008.

The court filing revealed that both Bear Stearns and Washington Mutual allegedly scaled back quality controls in an effort to produce more MBS, and focused on profits more than security.

The Times reported that while JPMorgan routinely hired Clayton Holdings, among other third parties, to evaluate the quality of home loans before they were packaged into MBS, the bank allegedly doctored the third party’s findings to reflect far less critical results. For example, the filing noted that one mortgage review in 2006 showed at least 1,154 loans that were more than 30 days delinquent, but JPMorgan advised investors that only 25 loans were delinquent.

JPMorgan has denied wrongdoing in both cases, and JPMorgan Chief Executive Officer, Jamie Dimon, has blasted prosecutors for blaming his firm for the actions of Bear Stearns, noting that the federal government should be grateful JPMorgan rescued the failing firm in 2008, the Times reported.