NEW YORK CITY: US regulators have reached a $13bn settlement with JPMorgan Chase to resolve numerous suits alleging poor mortgage practices, a person familiar with the matter said yesterday.
The settlement, the latest in a string of agreements over allegations the largest US bank by assets misled investors on mortgages, includes $4bn in relief for consumers and $2bn in penalties related to mortgage practices in California, the person said.
The deal also includes a previously announced JPMorgan settlement with the Federal Housing Finance Agency to settle claims JPMorgan misled investors on the quality of mortgage-backed securities sold to Freddie Mac and Fannie Mae. JPMorgan agreed to pay $4bn to settle claims related to mortgage-backed securities and $1.1bn on claims about single-family mortgages.
The settlement is also expected to resolve separate suits against JPMorgan by California, New York and other states.
JPMorgan in October reported a rare quarterly loss after taking a $9.2bn charge for increased legal expenses.
The Justice Department settlement comes on the heels of earlier settlements totalling into the billions in other mortgage violations, manipulation of the electricity market and poor governance and investor disclosures related to the large “London whale” trading loss.
JPMorgan’s negotiations with the Justice Department began in earnest last spring, after Justice Department lawyers in California reached a preliminary conclusion that the bank had violated US civil laws. The Justice Department had looked into mortgage bonds the bank sold from 2005 through 2007, the company disclosed in August.
Government lawyers had prepared to file a lawsuit against JPMorgan in September, and scheduled a news conference to announce it.
But they cancelled it at the last minute as JPMorgan reached out to government officials to discuss a settlement.
The settlement is the most significant action to come out of a task force the Obama administration created in January 2012, years after the height of the financial crisis, to probe the packaging and sale of shoddy home loans.AFP/Reuters
