JPMorgan's $4.5B Mortgage Accord Approved by Trustees - Analyst Blog


JPMorgan Chase & Co. 's ( JPM ) $4.5-billion mortgage securities deal with nearly 21 institutional investors has been approved by the trustees of the securities. The settlement accord was announced in Nov 2013, just a few days prior to the $13 billion deal with U.S. regulators.

Nevertheless, the settlement accords for 6 of the 330 residential mortgage-backed securities (RMBS) trusts issued by JPMorgan and Bear Stearns have been rejected by the trustees. Further, 27 trusts have obtained extension till Oct 1, 2014 to approve the accord.

The deal, concerning JPMorgan's sale of RMBS during 2005-2008 by misrepresenting facts about the quality of loans underlying these securities, settles the allegations against the bank. Notably, the compensation does not pertain to RMBS sold by Washington Mutual. Both Bears Stearns and Washington Mutual were acquired by JPMorgan in 2008.

The institutional investors include BlackRock, Inc. ( BLK ), MetLife, Inc. ( MET ), Pacific Investment Management Company, LLC, The Goldman Sachs Group, Inc. ( GS ), and several others.

In a similar move, Bank of America Corp. ( BAC ) had announced an $8.5-billion settlement deal with 22 institutional investors in 2011. Though largely approved by the judge in the New York court, appeals are still pending against the deal.

JPMorgan has been facing several litigation issues and probes for its business conduct in the pre-financial crisis period. Though the company has resolved quite a few of such cases, they continue to hurt its financials.

Currently, JPMorgan carries a Zacks Rank #3 (Hold).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: RMBS , JPM , MET , BLK , GS

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