JPMorgan Chase & Co (NYSE:JPM) has apparently reached a tentative $4 billion settlement agreement for allegations that it misled Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) regarding the quality of the mortgages it sold in the housing boom. That’s according to a report from Dan Fitzpatrick and Devlin Barrett of The Wall Street Journal.
If and when JPMorgan Chase & Co (NYSE:JPM) does settle the case with the FHFA, it will be the latest in a string of banks settling similar charges.
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JPMorgan doesn’t want to pay $6 billion
Sources told the newspaper that initially the Federal Housing Finance Agency sought $6 billion from JPMorgan Chase & Co (NYSE:JPM) in the case. The bank is apparently willing to pay some to settle the charges, but not $6 billion.
According to the report, the housing regulator created the basis of the settlement agreement with JPMorgan, and the bank is now trying to spread that agreement over to a series of probes being conducted by the Department of Justice. The DoJ has been investigating JPMorgan Chase & Co (NYSE:JPM)’s past mortgage bond sales. The bank wants to pin down one amount to cover not only the charges from the FHFA, but also possible civil and criminal charges.
JPMorgan’s total settlement could reach $11 billion
According to The Wall Street Journal’s sources, JPMorgan Chase & Co (NYSE:JPM) has discussed a total settlement value of $11 billion in consumer relief and cash to settle all of the pending cases and investigations against it. That would include the $4 billion which the bank would pay to the FHFA.
The agreement with the FHFA probably won’t become final until either a final settlement covering all the cases is reached or the DoJ and JPMorgan back away from broader negotiations. One of the problems the bank is facing in the negotiations is convincing the U.S. government to promise not to bring any more civil investigations into its past sales practices regarding mortgage bonds. Another big issue is agreeing to terms for putting an end to the government’s criminal investigation of JPMorgan’s past conduct.
JPMorgan settles with NCUA
JPMorgan Chase & Co (NYSE:JPM) has reportedly settled with the National Credit Union Administration, another federal regulator which oversees credit unions. It isn’t known how much the bank agreed to pay the regulator, which filed a complaint in 2011 accusing the bank of tricking credit unions into buying poorly performing mortgage bonds.