NEW YORK, Nov 28 (Reuters)—Bond insurer Assured Guaranty Ltdfiled new claims against JPMorgan Chase & Co over amortgage-backed security sold by Bear Stearns, saying more than 35witnesses have come forward to testify about how loans in the $337million transaction were misrepresented.

The lawsuit contends Bear Stearns and its EMC mortgage arm,acquired by JPMorgan after their collapse in 2008, knew the pool ofmore than 6,000 home-equity lines of credit that served ascollateral for the investment was filled with defective loans.

“Bear don't care,” was the mantra of underwriters at WattersonPrime, the due diligence firm hired by Bear to review loans formortgage securitizations, according to the lawsuit, filed in U.S.District Court in Manhattan and made public on Monday.

Jennifer Zuccarelli, a spokesman for JPMorgan, declined comment.A spokeswoman for Watterson Prime was not immediatelyavailable.

Assured, backed by billionaire investor Wilbur Ross, is amongseveral insurers, including Ambac Financial Group Inc., that claimthey were misled into insuring mortgage-backed securities beforethe housing market meltdown. They are seeking repurchase ofdefective loans and payment for claims. Assured said as of Oct. 25it had paid out more than $43 million in claims and anticipatestens of millions more.

The lawsuit cites examples of how defective loans were approvedfrom witnesses who said Bear Stearns valued quantity over qualityin its mortgage business.

The unnamed witnesses include former underwriters at EMC andWatterson Prime and former employees of loan originator GreenPointMortgage Fund, according to the lawsuit.

All loans whose borrowers' last names began with a “Z” were tobe approved regardless of guidelines, one former Watterson Primeunderwriter said she was once told, according to the 171-pagecomplaint.

Loan applications from security guards, janitors, and barberswho claimed they earned over $8,000 or $10,000 a month also wereput through, another underwriter said.

The $337 million transaction is one of hundreds ofmortgage-backed securities that Bear Stearns churned out in themid-2000s.

The firm purchased and securitized just under a million mortgageloans originally valued in excess of $212 billion from 2003 to2007, the lawsuit says, citing a prospectus.

Assured had sued EMC in July 2010 over the transaction. Therevised case adds JPMorgan as a defendant, and includes informationfrom the confidential witnesses.

Thomas Marano, the Bear Stearns senior managing directorresponsible for its mortgage securitization business, admitted toliquidating his personal holdings in bond insurers in November 2007before the extent of the bad collateral was public, according tothe filing.

A call to Marano, now chief executive officer of mortgageoperations at Ally Financial Inc, was not immediately returned.

The case is Assured Guaranty Corp. v EMC Mortgage Corp,10:cv-05367, U.S. District Court, Southern District of NewYork.