JPMorgan Chase Reaches $4.5B Agreement Investors Settlement

New York, NY: JPMorgan Chase & Co. has reached a $4.5 billion agreement with 21 major institutional investors, to make a binding offer to the trustees of 330 residential mortgage-backed securities (RMBS) trusts issued by J.P. Morgan, Chase, and Bear Stearns.

The investors include Black Rock Financial Management, Goldman Sachs Asset Management and the Prudential Insurance Co. of America. They alleged some of the mortgages included in the pools did not meet underwriting standards.

The claims stem from the representations and warranties of the securities, in which the bank agreed to buy back the loans if they didn't meet the standards described. If approved, the settlement would resolve all representation and warranty claims as well as servicing claims on all trusts issued by J.P. Morgan, Chase and Bear Stearns between 2005 and 2008. Further, it includes claims related to mortgage servicing. While this agreement would resolve representation and warranty claims as well as servicing claims facing the firm with respect to J.P. Morgan, Chase and Bear Stearns trusts, it does not resolve claims on trusts issued by Washington Mutual.

The offer will remain open until January 15, 2014, but may be extended pursuant to its terms for an additional sixty days. It includes the following key terms:

1.Payment by J.P. Morgan of $4.5 billion in cash to settle all representation and warranty claims as well as servicing claims that have been or could have been asserted by the 330 RMBS trusts;

2.J.P. Morgan has reserved the right to seek offset or credit payment made or benefit conferred under this settlement against or in reduction of any claimed damages by securities plaintiffs;

3.Implementation of certain servicing changes to mortgage loans serviced by J.P. Morgan in the 330 RMBS trusts;

4.Continuation of a previously agreed tolling and forbearance agreement among J.P. Morgan and the trustees while the trustees evaluate the proposed settlement.

Details of the settlement agreement can be found at: www.rmbstrusteesettlement.com

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Published on Nov-18-13