JPMorgan to Pay Fannie, Freddie $5.1B
October 29, 2013
JPMorgan has agreed to pay $5.1 billion to Fannie Mae and Freddie Mac in resolving allegations over loans that turned sour during the housing crisis, federal housing regulators say. The bank may also face other settlements on similar claims with the Justice Department and other government officials, CNNMoney reports.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, accused JPMorgan of misrepresenting the quality and risk of mortgages and mortgage securities that it sold to the government-sponsored enterprises. JPMorgan sold the risky mortgages under its firms Bear Stearns and Washington Mutual, which JPMorgan acquired in 2008.
“This is a significant step as the government and JPMorgan Chase move to address outstanding mortgage-related issues,” says Edward DeMarco, acting head of the FHFA.
JPMorgan, the biggest bank in the nation, agreed to the payout without admitting or denying any wrongdoing in the matter.
The bank will pay $4 billion to the government entities and repurchase $1.1 billion worth of mortgages it sold to Fannie Mae and Freddie Mac between 2000 and 2008.
JPMorgan is one of 18 banks that the FHFA has sued over alleged mortgage-backed securities misrepresentations. It marks the fourth bank settlement to date. In July, UBS agreed to pay $885 million to the FHFA over similar allegations. CitiGroup and General Electric also have agreed to payouts for undisclosed amounts.
Source: “JPMorgan Paying $5.1 Billion to Fannie, Freddie Over Mortgages,” CNNMoney (Oct. 25, 2013)
Updated: June 19, 2018