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Chase settles $4B with homeowners

By Polyana da Costa ·
Wednesday, November 20, 2013
Posted: 11 am ET

JPMorgan Chase and the Justice Department reached a $13 billion settlement over the sale of troubled mortgage-backed securities that contributed to a market collapse in 2008.

About $4 billion of the settlement will go to underwater homeowners, potential homebuyers in distressed areas of the country and those "harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual," the DOJ says.

How big is your slice? Unknown

JPMorgan Chase has until 2017 to provide $4 billion in relief to homeowners. But the company plans to complete the commitment by the end of 2016, Chief Financial Officer Marianne Lake said during a conference call with investors on Tuesday after the settlement was announced.

The bank did not provide details on which borrowers would be eligible for relief. Lake says the relief will include principal forgiveness, loan modification and lending to low- and middle-income borrowers.

Worth multiple London Whales

This is the largest settlement between the government and a single company, and it was part of President Barack Obama's Financial Fraud Enforcement Task Force. In addition to the $4 billion in relief to homeowners, the settlement includes:

  • $2 billion in a civil monetary penalty.
  • $4 billion in payments to the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, for alleged loan losses.
  • $3 billion in payments to the Federal Deposit Insurance Corp., the National Credit Union Administration, and several state attorneys general.

JPMorgan Chase says it did not admit to any violations of the law as part of the global settlement.

What's another word for 'misrepresentations'?

The DOJ says that "as part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public -- including the investing public -- about numerous RMBS [residential mortgage-backed security] transactions." The settlement does not absolve the lender or its employees from facing any possible criminal charges, the DOJ noted in a press release.

Thus do they all

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior."

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M Christian
July 17, 2014 at 1:52 pm

I have nothing bad to say about Chase. I have made my payments on time and received a letter from them to do a refi with a 2% lower interest rate because of my "Paying on time and good customers deserve rewards" per letter received. It dropped my payments by $197.00 per month.

Don Morgan
July 16, 2014 at 10:57 pm

No amount of money can replace the pain and stress caused by these banks such as JP Morgan Chase. I think people who caused this should do jail time. They have all the money in the world to payout in fines and restitution. It will do nothing to deter it from happening again unless prison time is involved, and I mean serious time. They will do this again or something similar as long as they see profit. They don't care about what happens to someone's life.

July 16, 2014 at 7:13 pm

I need to know what I can do about my house. Please contact me.

Susie Lenon
July 16, 2014 at 7:10 pm

I want to comment on Chase. A family member had her mortgage with them, they said she was behind 3 payments even though she had checks to prove she'd paid, she sent them copies, yet they still denied she paid them, and she lost her home, because they insisted she repay them in full all 3 payments at once! She had owned her home for 15 years, and lost it because of errors made by Chase, she then ask them if they would do a loan modification but they refused to work with her, she didn't know what else to do because the bank repo' her home.
She went from owning a home, to homeless with 2 children!