* JPMorgan ( JPM ) accused of ignoring inflated financials

provided by property seller

* Wells Fargo ( WFC ) seeks loan repurchase or damages

* JPMorgan ( JPM ) not available for comment

By Jonathan Stempel

NEW YORK, March 30 (Reuters) - A federal judge on Monday

rejected JPMorgan Chase's ( JPM ) bid to dismiss Wells Fargo's ( WFC )

breach of contract lawsuit to recoup losses for

investors in a defaulted $481 million commercial real estate

loan.

U.S. District Judge Dale Ho in Manhattan said Wells Fargo ( WFC ),

acting as the investors' trustee, adequately alleged that

JPMorgan ( JPM ) knew of an event of default by Chetrit Group, a

Manhattan real estate development firm that took out the loan in

2019 to buy 43 multifamily properties with 8,671 apartments in

10 U.S. states.

Wells Fargo ( WFC ) said the borrower defaulted in 2022 and owed more

than $285 million when the complaint was filed last March, while

investors lost tens of millions of dollars.

JPMorgan ( JPM ) did not immediately respond to requests for

comment.

In its complaint, Wells Fargo ( WFC ) said Chetrit told JPMorgan ( JPM )

more than five months before the $522 million purchase closed

that the seller overstated the properties' historical net

operating income, a key commercial real estate metric, yet

JPMorgan ( JPM ) pretended "nothing unusual had happened" when making

and marketing the loan.

JPMorgan ( JPM ) argued that Wells Fargo ( WFC ) did not show how the

overstatement reduced the value of the loan or the underlying

properties.

But the judge said a plaintiff "may plead a material breach

where the breach materially increases a loan's risk of loss."

Wells Fargo ( WFC ) accused JPMorgan ( JPM ) of turning a blind eye in

pursuit of millions of dollars in fees.

It wants the largest U.S. bank to repurchase the loan, less

amounts the trust received from sales of underlying properties,

or else pay damages.