JP Morgan Settlement Finalized

Posted by kevin on November 23, 2013 under Foreclosure Blog | Comments are off for this article

Periodically, we have been tuning in to the negotiations between the Justice Dept and JP Morgan Chase (“JPMC”). It is clear that JPMC wanted to settle to put a cap on its liabilities and to probably also to keep from the public damaging information about the types of loans it was making, servicer improprieties, and robo-signing issues (although technically part of $25 Billion settlement, chance that negative info could have come out in discovery). At any rate, this past Tuesday, the deal with the Justice Dept (which included pro-active States) was finalized for $13 Billion. Here is the breakdown:

$4 Billion to help struggling homeowners of which $2 Billion to lower principal balances and $2 Billion for other homeowner relief including lowering interest rates;
$4 Billion to FHFA for questionable loans sold to Fannie and Freddie;
$1.4 Billion to National Credit Union Administration;
$300 Million to California AG;$515 Million to FDIC;
$2 Billion to Justice Dept.
$300 Million to California AG;
$20 Million to Delaware AG;
$100 Million to Illinois AG;
$34.4 Million to Massachusetts AG; and
$614 Million to NY AG.

(Nothing for NJ because we have been less than pro-active in this fight (as we were in the Revolutionary War and Civil War- but let’s not get into that). The deal does not include a “get out of jail free” pass for possible criminal activity.

In addition, on November 15, JPMC agreed to pay $4.5 Billion to an investor group including Black Rock, Goldman Sachs Asset Management, LP and others based on sale of securities by JP Morgan and Bear Stearns.

Now, if these settlements were based on bad loans sold by JPMC to investors or Fannie and Freddie, how come the loans that backed up these securities are not viewed as equally bad? On the positive side, however, money is available for settlements. Although servicers still dance borrowers around during the modification process (and that is not going to change dramatically no matter what MHA says), we believe that Borrowers with JPMC, or Bear Stearns loans should actively pursue modification. The money is there.

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