JPMorgan Chase announced last week that it has reached a $5.1 billion agreement with the Federal Housing Finance Agency to settle litigation related to allegedly bad mortgage-backed securities purchased from Fannie Mae and Freddie Mac.
The settlements relate to approximately $34 billion of securities purchased by Fannie and Freddie from Bear Stearns and Washington Mutual just before the financial crisis. The bank agreed to resolve the government-sponsored enterprises’ claims associated with loan purchases between 2000 and 2008 for $1.1 billion.
Under the terms of the agreement, JPMorgan will pay approximately $2.74 billion to Freddie and $1.26 billion to Fannie.
“The satisfactory resolution of the private-label securities litigation with J.P. Morgan Chase & Co. provides greater certainty in the marketplace and is in line with our responsibility for preserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers,” FHFA Acting Director Edward J. DeMarco said. “This is a significant step as the government and J. P. Morgan Chase move to address outstanding mortgage-related issues.”
The FHFA has settled four of the 18 securities suits it filed in 2011.