JPM, US Housing Agency Reach $4B Deal: Report

Features Reuters

JPMorgan Chase & Co (JPM) has reached a tentative $4 billion deal with the U.S. Federal Housing Finance Agency to settle claims that the bank misled government-sponsored mortgage agencies about the quality of mortgages it sold them during the housing boom, the Wall Street Journal reported on its website on Friday.

Continue Reading Below

The deal is for less than the $6 billion the agency initially sought, the Journal said, citing people close to the discussions.

A spokesman for JPMorgan declined to comment as did a spokeswoman for the FHFA.

JPMorgan and the FHFA, which is pursuing claims on behalf of finance agencies Fannie Mae and Freddie Mac, have worked up a general agreement that the bank wants to wrap into a larger deal with the U.S. Department of Justice, the Journal said.

The bank and the Department of Justice have discussed a broader deal under which JPMorgan would pay a total of $11 billion, including $7 billion of cash and $4 billion of consumer relief, to cover claims from the FHFA and other government agencies.

JPMorgan is seeking a single settlement to resolve all claims from federal and state agencies over its mortgage-related liabilities stemming from the bust in house prices.

Continue Reading Below

A final deal between the bank and the FHFA is unlikely to happen outside of a broader pact, a person familiar with the matter told Reuters.

CEO Jamie Dimon went to Washington to meet with U.S. Attorney General Eric Holder on September 26 to advance those discussions, but a deal has not been forthcoming.

JPMorgan reported its first quarterly loss under Dimon on Friday as the company recorded a $7.2 billion hit from litigation expenses largely to build its reserves to settle lawsuits over mortgages.

(Reporting by David Henry in New York; Editing by Gary Hill and Leslie Gevirtz)