New York, NY, United States (4E) – JPMorgan Chase & Co. said it has struck a tentative deal with the Federal Housing Finance Agency (FHFA), agreeing to pay $4bn over the bank’s sale of mortgage-backed securities, according to sources with knowledge of the matter.
The biggest lender in the U.S. said the amount will settle allegations that it misled Freddie Mac and Fannie Mae regarding the quality of home loans the bank sold to both firms before the housing crisis unfolded, the sources said.
The potential agreement with the regulator, which originally demanded JPMorgan to pay $6bn, could be part of a much broader deal the bank is seeking with authorities both in the federal and state levels, according to another source who was briefed on the settlement negotiations.
If the New York-based lender cannot reach a global settlement on pending mortgage-related issues, it may instead individually settle claims like with the FHFA, said two people who requested not to be identified because the talks are confidential.
JPMorgan has said that it is in their shareholders’ best interest that it should strike one large deal to end the bleeding as a result of the heavy legal costs, the people said.
Last week showed that the $9bn in litigation and regulatory costs have finally caught up with JPMorgan as it reported its first loss since Jaime Dimon was named Chief Executive Officer in 2004.