The Department of Justice announced today a settlement with JP Morgan Chase in the amount of $13 billion, marking one of the largest mortgage settlements in history, and the largest-ever with a single entity.
The settlement resolves federal and state civil claims having to do with packaging, marketing, sale and issuance of residential mortgage-backed securities by J.P. Morgan, Bear Stearns and Washington Mutual before 2009.
The company has acknowledged it misrepresented the public about numerous mortgage securities transactions.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder in announcing the agreement. “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. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over.”
Of the $13 billion total settlement, $9 billion will settle federal and state civil claims related to mortgage backed securities. The remaining $4 billion will be used to provide relief to distressed homeowners including principal forgiveness, loan modifications, targeted originations and other efforts, the DOJ said.
The settlement is the largest settlement for a single company relating to the housing and economic crisis and does not release JP Morgan or any individuals from potential criminal prosecution, according to the Justice Department.
Written by Elizabeth Ecker