A multi-billion dollar settlement reached with JPMorgan Chase & Co. resolves pending litigation filed on behalf of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. as well as outstanding repurchase demands from the pair of government-controlled enterprises.
The New York-based company disclosed Friday that it has agreed to settlements with Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency.
The agreement resolves all of its litigation pending with the FHFA over $33.8 billion in mortgage-backed securities issued by Chase and subsidiaries Bear Stearns and Washington Mutual.
The settlement will cost Chase $4 billion, with Fannie getting $1.26 billion and Freddie receiving $2.74 billion.
The lawsuit filed in September 2011 by FHFA as conservator for Fannie and Freddie was one of 17 filed against numerous issuers and underwriters of MBS purchased by the pair of secondary lenders.
Chase additionally agreed to pay $1.1 billion to resolve repurchase claims from Fannie and Freddie associated with whole loan purchases from 2000 to 2008. Fannie’s share is $670 million, and Freddie is getting $480 million.
“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 Director Edward J. DeMarco said in a statement. “This is a significant step as the government and J. P. Morgan Chase move to address outstanding mortgage-related issues.”
Both agreements were reached today.
Fannie issued a statement that Chase will remain obligated for certain other contractual responsibilities under the resolution agreement.
“This agreement appropriately resolves our repurchase claims, compensates taxpayers for losses fairly and allows Fannie Mae and J.P. Morgan Chase to move forward as strong business partners,” Fannie Mae President and Chief Executive Officer Timothy J. Mayopoulos said in a statement. “One of our goals in 2013 was to put legacy issues behind us so we can focus on building a stronger housing finance system for the future. We have made significant progress, and will continue working with our customers to bring our representation and warranty claims to a satisfactory close.”
Chase still has yet to resolve another MBS matter pending with the Department of Justice and a criminal matter in California.
