JPMorgan and FHFA forge settlement agreement
A settlement agreement was finalized between JPMorgan Chase & Co and the Federal Housing Finance Agency on claims over defective home loans and mortgage backed securities. These securities were sold to mortgage giant Fannie Mae and Freddie Mac, causing the domino effect on the recent worldwide financial crisis.
This settlement would form part of an overall USD13 billion agreement the bank has been negotiating with regulatory authorities. For this aspect of the settlement, USD4 billion would go to resolve claims on mortgage bonds while USD1.1 billion would settle claims that JPMorgan had sold faulty mortgages which it then packaged into their own securities according to a FHFA statement made today.
In a released statement from the bank, JPMorgan said, "Today's settlements totalling USD5.1 billion are an important step towards a broader resolution of the firm's MBS-related matters with government entities."
For its part, FHFA Acting Director Edward J. DeMarco said, through a statement, "I am pleased that a resolution of single-family, whole-loan representation and warranty claims could be achieved at the same time."