JPMorgan Chase Agrees to Record $13 Billion Mortgage Settlement

Posted on Nov 21, 2013

Another huge mortgage settlement by a huge (the biggest) bank, but what does it mean to homeowners, particularly in the Houston area? Probably not a lot.

It is the largest amount ever paid by one corporation to the federal goverment, but $6 Billion and a large fine will go to investors in the troubled mortgages, not homeowners.

There will be a $4 Billion payment out of the $13 Billion for consumer relief. Part of the $4 billion would go toward helping homeowners whose mortgages are handled by the bank. Another part is supposed to be used to reduce blight in neighborhoods suffering from rundown and abandoned homes.

According to the Department of Justice press release:

JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.  That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight.  An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations.

Importantly, the settlement does not release individuals from more civil charges, nor does it release JPMorgan of possible criminal charges. Another part of the press release explains what precipitated the huge settlement:

“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger.  “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis.  It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”

 

 

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