J.P. Morgan Chase & Co has reached a tentative $4 billion deal with the US 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, according to a person familiar with the matter.
J.P. Morgan and the FHFA, which is pursuing claims on behalf of finance agencies Fannie Mae and Freddie Mac, have agreed on the amount as a tentative part of a potential $11 billion global settlement with government agencies, including the US Department of Justice. The $4 billion figure was first reported on Friday by the Wall Street Journal.
A spokesman for J.P. Morgan declined to comment as did a spokeswoman for the FHFA. The bank and the Department of Justice have discussed a broader deal under which J.P. Morgan would pay $7 billion of cash and $4 billion of consumer relief, to cover claims from the FHFA and other government agencies.
J.P. Morgan 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. Baring a complete breakdown in talks with the Department of Justice, 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 on Friday. Earlier this week, others familiar with the talks said negotiations continued between the Justice Department and J.P. Morgan, with the bank circulating several proposals.
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