- POSTED: 05 Feb 2014 08:44
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JPMorgan Chase will pay US$614 million to settle US charges that it approved thousands of bad loans that wrongly qualified for federal insurance, the Department of Justice announced Tuesday.
NEW YORK: JPMorgan Chase will pay US$614 million to settle US charges that it approved thousands of bad loans that wrongly qualified for federal insurance, the Department of Justice announced Tuesday.
The big US bank approved thousands of mortgage loans that were guaranteed by Federal Housing Administration and hundreds that were guaranteed by the Department of Veterans Affairs, even though they did not meet requirements, the Justice Department said.
The US agencies suffered "substantial losses" due to JPMorgan's approval of bad loans, Justice said.
"JPMorgan Chase put profits ahead of responsibility by recklessly churning out thousands of defective mortgage loans, failing to inform the government of known problems with those loans and leaving the government to cover the losses when the loans defaulted," said Preet Bharara, US Attorney for the Southern District of New York.
The agreement follows a record US$13 billion settlement announced in November 2013 over charges the bank misled on the sale of mortgage-backed securities.
A JPMorgan statement characterized Tuesday's agreement as "another significant step in the Firm's efforts to put historical mortgage-related issues behind it."
JPMorgan as agreed to more than US$20 billion in government settlements since the start of 2013 as it confronts what it has characterized as an unprecedented increase in regulatory scrutiny.
JPMorgan "believes it is fully reserved for the settlement, and any financial impact related to exposure on future claims is not expected to be significant," JPMorgan said.