JPMorgan Chase reaches $5.1 billion agreement with FHFA

Oct. 26, 2013 at 10:52 AM   |   0 comments

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NEW YORK, Oct. 26 (UPI) -- U.S. financial giant JPMorgan Chase said it agreed to pay $4 billion to resolve litigation issues with the Federal Housing Finance Agency.

"This settlement resolves the firm's largest mortgage-backed securities case and relates to approximately $33.8 billion of securities purchased by Fannie Mae and Freddie Mac from J. P. Morgan, Bear Stearns and Washington Mutual," the company said, referring to the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, mortgage giants that purchase bundled loans, known as securities, from commercial banks.

The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, challenged JPMorgan Chase on the quality of loans the two mortgage brokers purchased before the financial crisis, when banks were writing risky loans that soured, which put the financial system in danger of collapse.

The settlement with the FHFA also includes an agreement for JPMorgan Chase to re-purchase $1.1 billion in loans it sold to the mortgage brokers between 2000 and 2008.

"Today's settlements totaling $5.1 billion are an important step towards a broader resolution of the firm's [Mortgage-Backed Security] MBS-related matters with governmental entities, and reflect significant efforts by the Department of Justice and other federal and state governmental agencies," the bank and the FHFA said in a joint news release.

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