By Jonathan Stempel

NEW YORK, March 10 (Reuters) - Wells Fargo WFC.N sued JPMorgan Chase JPM.N on Monday to recover losses for investors in a $481 million commercial real estate loan that was allegedly based on a fraudulently inflated financial metric.

The lawsuit pits the fourth-largest U.S. bank against the largest, with Wells Fargo accusing JPMorgan of turning a blind eye during due diligence in pursuit of millions of dollars in fees.

JPMorgan made the loan to finance the 2019 purchase by the Chetrit Group, a private Manhattan real estate development firm, of 43 multifamily properties with 8,671 apartments in 10 U.S. states.

Wells Fargo, in its role as the investors' trustee, said JPMorgan and Chetrit learned before the $522 million purchase closed that the seller overstated the properties' historical net operating income, a key commercial real estate metric, by 25%.

But according to the complaint in Manhattan federal court, JPMorgan went ahead with the loan, knowing it would eventually be sold in pieces to unwitting investors.

The borrower defaulted in 2022 and still owes more than $285 million, while investors have lost tens of millions of dollars, Wells Fargo said.

"JPM had an obligation to engage in due inquiry to determine the scope of the fraudulent reporting" after learning about the inflated metric, Wells Fargo said.

"Instead, JPM plowed ahead as if nothing unusual had happened," Wells Fargo added, "without even bothering to correct known errors in the numbers."

The defendants also include Meyer Chetrit, a Chetrit Group principal who provided a loan guaranty.

JPMorgan and the Chetrit Group had no immediate comment.

Wells Fargo wants New York-based JPMorgan to repurchase the loan, less amounts the trust received from sales of underlying properties, or else pay damages for breach of contract.

Lawyers for San Francisco-based Wells Fargo did not immediately respond to requests for additional comment.

The case is Wells Fargo Bank NA as trustee v JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 25-01943.

(Reporting by Jonathan Stempel in New York; Editing by Matthew Lewis)

((jon.stempel@thomsonreuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net/))