JPMorgan Chase agrees to pay $4.5 billion on mortgage security claims
By Karen Freifeld
NEW YORK (Reuters) - JPMorgan Chase & Co said on Friday it has agreed to pay $4.5 billion to settle claims by investors who lost money on mortgage-backed securities before the collapse of the U.S. housing market.
The bank reached the agreement with 21 institutional investors in 330 residential mortgage-backed securities trusts issued by JPMorgan and Bear Stearns, which it took over during the financial crisis, according to the bank and lawyers for the investors.
The deal still has to be accepted by seven trustees overseeing the securities holdings, the parties said.
The settlement does not include trusts issued by Washington Mutual, which JPMorgan also acquired.
The deal is separate from the preliminary $13 billion settlement JPMorgan has reached with the U.S. government that would resolve a raft of actions over mortgage-backed securities.
"This settlement is another important step in J.P. Morgan's efforts to resolve legacy related RMBS matters," the bank said in a statement. The bank said it believes reserves it has built will cover the expense of "this and any remaining" mortgage securities litigation.
The 21 investors include BlackRock Inc, Metlife Inc, Allianz SE's Pacific Investment Management Company, the TCW Group and Bayerische Landesbank.
Under the agreement, trustees have until January 15 to accept the offer, which may be extended for another 60 days, according to JPMorgan and Gibbs & Bruns, the Houston law firm that represented the institutional investors. Continued...