The Department of Justice (DOJ) and JPMorgan Chase & Co. (NYSE:JPM) are poised to reach a final settlement with a record amount of $13 billion in connection with the mortgage securities liabilities of the bank to government agencies.

JPMorgan banks

The USA Today report indicated that a public announcement regarding the agreement could happen as early as Tuesday based on information from an individual familiar with the negotiations. According to the source, who requested anonymity due to the private nature of the issue, JPMorgan Chase & Co. (NYSE:JPM) agreed to take the mortgage securities problems of Washington Mutual, the bank it acquired but went bankrupt during the financial crisis.

JPMorgan will not pursue such strategy

There had been reports from different media entities that JPMorgan Chase & Co. (NYSE:JPM) previously intended to claim recovery from the legal estate of Washington Mutual through the Federal Deposit Insurance Corporation (FDIC). The FDIC took control of Washington Mutual, and eventually sold the assets of the bank to JP Morgan. According to the source, Attorney General Eric Holder obtained an affirmative language that JP Morgan will not pursue such a strategy.

The $13 billion tentative settlement included a $4 billion consumer relief package intended for write-downs on mortgages and lower monthly payments for homeowners.

Details of the consumer relief package

The person familiar with the situation said out of the $4 billion consumer relief package, $1.5 billion will be allocated for write downs of loans that exceeded the property value, and around $500 million will be used to restructure loans to reduce the monthly payments of homeowners. The remaining $2 billion will be allocated for different initiatives such as new loans for low and moderate-income borrowers in areas that were hardest hit by the housing crisis, and demolition of abandoned homes.

The $4 billion consumer relief package could put an end to the investigations of the offices of California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman against JPMorgan Chase & Co. (NYSE:JPM).

The $13 billion tentative deal also covers that $4 billion penalty announced by the Federal Housing Finance Agency (FHFA) to settle the allegations against the bank for violating securities laws related to the $33.8 billion defective mortgages sold to Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).