JP Morgan reaches $5.1bn settlement deal with U.S. housing regulator

JP Morgan reaches $5.1bn settlement deal with U.S. housing regulator

PanARMENIAN.Net - JP Morgan has reached a $5.1bn settlement with the U.S. Federal Housing Finance Agency (FHFA) over charges it misled mortgage giants Fannie Mae and Freddie Mac during the housing boom.

A separate settlement with the U.S. Justice Department is expected to be announced soon.

"This is a significant step to address outstanding mortgage-related issues," the FHFA said in a statement, the biggest ever issued by a U.S. bank.

JP Morgan said the settlement resolves the biggest case against the firm relating to mortgage-backed securities. The bank added that the agreement relates to "approximately $33.8 billion of securities purchased by Fannie Mae and Freddie Mac from JP Morgan, Bear Stearns and Washington Mutual" from 2005 - 2007.

JP Morgan purchased Bear Stearns and Washington Mutual at the height of the financial crisis of 2008-2009, and has tried to argue that it should not be punished for mistakes made before those deals.

As part of the agreement with the FHFA, the bank will pay $4bn to Fannie Mae and Freddie Mac to settle claims that it violated U.S. securities law.

It will pay the agencies an additional $1.1bn for misrepresenting the quality of single-family mortgages.

Fannie Mae and Freddie Mac are the biggest mortgage lenders in the U.S. They received $187bn in US taxpayer aid to help them stay afloat during the financial collapse. They have since repaid $146bn of the loan.

JP Morgan has been under investigation for several months by U.S. regulators.

The bank said that it hoped the settlement would be part of a "broader resolution" of the firm's housing bubble woes - a nod to an expected settlement with the U.S. Justice Department that is also likely to run to several billions of dollars.

The firm reported a rare loss last quarter, having set aside an additional $9bn to help it deal with its mounting legal troubles.

JP Morgan has set aside a total of $23bn to help the bank work through its many investigations by regulators in the U.S. and abroad.

Last month, the bank agreed to pay more than $1bn to help it end various investigations into its 2012 "London whale" trading debacle, which cost the bank more than $6bn and raised questions about its oversight procedures.

Photo: blog.heritage.org
Related links:
 Top stories
“It’s a speculation, we can neither comment or react to it,” an Diana Gazinyan from HSBC Armenia said.
Armenia's GDP grew by a strong 7.9% year-on-year in the third quarter of 2019, the World Bank said.
"This is the 3rd product of animal origin from Armenia for which EU grated access to its market," the EU said.
Masdar has entered into a formal agreement with Anif to develop 400 MW solar power projects in Armenia.
Partner news