US government reaches $5.1 billion settlement with JPMorgan

[JURIST] The Federal Housing Finance Agency (FHFA) [official website], acting in its capacity as conservator for Freddie Mac and Fannie Mae [corporate websites], on Friday announced a $5.1 billion settlement with JPMorgan Chase & Co. [corporate website]. The FHFA alleged [complaint, PDF] that JPMorgan misrepresented the quality of the sub-prime mortgages and mortgage securities sold to Fannie Mae and Freddie Mac, which resulted in several billion dollars' worth of damages when the housing bubble collapsed in 2008. JPMorgan settled [press release, PDF] representation and warranty claims for approximately $1.1 billion, with $480 million to Freddie Mac and $670 million to Fannie Mae, and is to pay $2.74 billion to Freddie Mac and $1.26 billion to Fannie Mae in a separate settlement to address allegations of violations of federal and state securities laws.

The FHFA sued 18 banks in 2011 for the misrepresentation of mortgage-backed securities [press releases, PDF] in connection with the housing bubble and subsequent sub-prime mortgage crisis [JURIST news archive], resulting in more than $200 billion in losses for Fannie Mae and Freddie Mac. JPMorgan is the fourth company to reach a settlement [CNN report] with the FHFA. In July UBS [corporate website] settled [press release] with FHFA for $885 million. The FHFA also settled with Citigroup in May and General Electric [Reuters reports] in January for undisclosed amounts.

 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.