On October 18th, JPMorgan Chase tentatively agreed to paying yet another fine to the Justice Department. This time Chase is settling federal and state lawsuits over their mortgage-backed securities business and questionable mortgage practices that led up to the financial crisis.
The deal, in which Chase would pay $13 billion is not set in concrete and could still fall apart as Chase argues how much wrongdoing the bank is willing to admit to. Acknowledging improper actions would expose Chase to a host of shareholder lawsuits. Most of the $13 billion would relieve Chase from many state and federal lawsuits and investigations.
This latest deal will put civil cases to rest but will not save Chase from a parallel criminal inquiry from federal prosecutors in California. Whether Chase will continue to argue this part of the settlement remains unclear.
Roughly $4 billion of the agreement would go to the Federal Housing Finance Agency to settle allegations Chase misled Fannie Mae and Freddie Mac about the quality of the loans sold to them right before the 2008 financial crisis.
The $9 billion would go out in fines, with approximately $4 billion of that going to relief for struggling homeowners. It’s also unclear what type of relief the homeowners would receive.
The $25 billion February 2012 National Mortgage Settlement (NMS) intended to help homeowners (included Chase) has fallen short and analysts complain too much relief was given to people who gave up their homes in short sales and not enough to help people retain their homes. In other words, homeowners had to hand over their homes for less than what was owed, and in many cases, less than what it was worth. Additionally, most of that aid was not focused on low or moderate-income families who were forced out of their homes. Banks argue the short sales were a valuable form of relief allowing people to get out of bad situations and move to a new job.
Chase has been plagued with other large settlements since 2010. Just last month, Chase agreed to pay $389 million for unfair billing practices and mistakes in debt-collection lawsuits. In July 2013, Chase agreed to pay $410 million related to alleged bidding manipulation of California and Midwest electricity markets.
Chase lawyers question this settlement saying the $13 billion penalty is more than half of its 2012 profits and that Chase inherited some of the liabilities when it bought Bear Stearns and Washington Mutual in 2008.
Chase has also admitted wrongdoing to the Securities and Exchange Commission and the Commodity Futures Trading Commission and approved $1 billion in fines to resolve investigations into trading loss in London and into the bank’s credit card products.
The bank is still weathering a huge wave of scrutiny as seven federal agencies, several state regulators and two foreign countries continue their investigations.
Keith A. Gantenbein, Jr. is a licensed, Colorado foreclosure defense attorney and real estate attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes foreclosure prevention, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. He also handles real estate closings, title issues, lien issues, quiet title, real estate contracts, bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, contracts and landlord/tenant.
If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Keith Gantenbein at (303) 618-2122 for a one-hour consultation where he will discuss your situation and go over all your options with you.