The Justice Department and JPMorgan Chase & Co. have finally reached an agreement involving the $13 billion settlement of a civil inquiry into the company’s sales of low-quality mortgage backed securities that collapsed in value during the financial crisis. The settlement is the largest ever reached between the government and a corporation- surpassing the $4 billion BP oil spill settlement.
The agreement will require JPMorgan Chase & Co. to pay $6 billion to compensate investors, pay $4 billion to help struggling homeowners and pay the remainder as a fine.
So how is this going to help struggling homeowners hit hard by the housing crisis? Well, according to the first person close to the talks, some $1.5 billion will be a write-down forgiving homeowner loans, $300 million will enable homeowners to pay less now on their mortgages and the remainder of the $4 billion will go toward reducing existing loans, originating new loans and helping revive properties in some of the hardest hit areas of the housing crisis, such as Detroit.
Still to come is a decision as to whether the Justice Department will file criminal charges against JPMorgan Chase & Co. An investigation in currently under way.
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