According to Mosby, "Any estimate of JPM's ultimate exposure from lawsuits on the private label side is a real guess."

"They are dealing with five levels: Fannie, Freddie, the Federal Housing Administration (FHA), FHFA and private label. JPMorgan wants to get through the first four of those, and then be left with the private label stuff they have to fight for the next several years," he says.

With home prices continuing to rise Mosby says "a lot of those private label securities are boing to perform well enough that the investors' appetite to go through that battle is probably going to be less."

What About JPMorgan's Stock?

Investors who are not among the JPMorgan Chase faithful may wonder why the stock has performed so well, especially recently, but the numbers really do tell a good story for the long-term.

JPMorgan's shares closed at $52.75 Wednesday, returning 23% this year, which compares rather well to the 26% return for the KBW Bank Index ( I:BKX), especially when considering the pummeling the bank has taken this year from regulators and the media.

The shares are up slightly since Sept. 10, the day before the company surprised investors by announcing a third-quarter net loss of $380 million, or 17 cents a share, springing from $9.15 billion in extraordinary legal expenses, which came to $7.2 billion, or $1.85 per share, after tax.

At that time, the media reports centered on a figure of $11 billion for government settlement. In the meantime, the figure has climbed as high as $13 billion. JPMorgan Chase reported $23 billion in litigation reserves as of Sept. 30. The coming settlements will of course make a big dent, and there's no way of knowing how much in additional legal reserves the company will set aside for a possible wave of private mortgage putback lawsuits.

Why do 26 out of 33 sell-side analysts polled by Thomson Reuters rate JPMorgan Chase a buy?

One reason is that the shares trade for 8.8 times the consensus 2014 earnings estimate of $6.01 a share. That is one of the lowest forward price-to-earnings ratios for actively traded U.S. banks.

Another reason is that the company actually grew its third-quarter operating revenue year-over-year, if litigation reserve provisions and the industry-wide decline in mortgage revenue were stripped out.

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