JPMorgan Chase and the Justice Department are moving closer to a $13 billion settlement over the bank’s mortgage practices, a record penalty that would cap weeks of heated negotiating and underscore the extent of the bank’s legal woes, people briefed on the talks said.
To resolve an array of federal and state investigations into the bank’s sale of troubled mortgage securities to investors in the lead up to the financial crisis, the bank would be expected to pay about $9 billion in fines, according to a person briefed on the negotiations. JPMorgan, the nation’s largest bank, is also likely to spend $4 billion in relief for struggling homeowners, another person briefed on the talks said.
The penalties eclipse what the bank previously offered to pay. Until now, JPMorgan was offering about $11 billion in total. And it was refusing to increase its offer until the Justice Department dropped a parallel criminal investigation into the bank’s sale of troubled mortgage securities to investors.
But the bank, one of the people briefed on the talks said, has tentatively backed down from that demand, a major victory for the government. The Justice Department is free to pursue its criminal investigation into the bank.
