JPMorgan Chase has agreed to terms of a $13 billion settlement with federal and state regulators over the bank’s sale of toxic mortgage-backed securities. The agreement, which is expected to be announced today, includes compensatory payments of $7 billion, a fine of $2 billion, and $4 billion in aid to distressed homeowners.
JPMorgan’s CEO Jamie Dimon will hire an outside monitor to oversee the distribution of the funds to homeowners. The sticking point of the deal was the amount of aid slated for these homeowners, and the U.S. Department of Justice asked the U.S. Department of Housing and Urban Development for help in the final round of talks with the bank, the Wall Street Journal reported.
About half of the aid will fund measures such as originating new mortgages for low- and moderate-income borrowers and absorbing the remaining principal owed on vacant properties that are yet to be foreclosed on, sources told the Journal. [WSJ] – Hiten Samtani