What Does the $13 Billion JPMorgan Settlement Mean for Homeowners?
JPMorgan Chase has agreed to pay the United States $13 billion to settle claims involving the sale of grossly overvalued mortgage-backed securities to investors. The sale of these mortgages, often performed with minimal underwriting, helped lead to the housing collapse over the past decade. The settlement still leaves the door open for criminal prosecution of JPMorgan employees as well as suits filed by individual investors, but it closes the book on the government civil investigation of JPMorgan.
As a part of the settlement, it appears that $4 billion of the total $13 billion payment will go to the Department of Housing and Urban Development while another $4 billion will go to troubled mortgage lenders Fannie Mae and Freddie Mac. $1.5 billion of the payment to HUD will be earmarked for loan forgiveness and loss mitigation remedies for homeowners. In addition, parts of the settlement will go towards demolition of vacant homes owned by financial institutions and assistance for future low and middle class borrowers.
The settlement is little more than a pinprick for JPMorgan and, unfortunately, the relief to homeowners also pales in comparison to the continuing struggles of the recovering housing market. Homeowners who previously were ineligible for loan modifications likely will not see themselves suddenly candidates for them. The settlement is also not likely to help expedite claims underwater homeowners have on their mortgages.
Perhaps most importantly, the settlement does not affect the way the banks deal internally with troubled mortgages. While more funds will be available to be allocated for loan workouts, the process implemented by JPMorgan will roughly remain the same. If a homeowner is at risk of foreclosure, he or she should consult an attorney who understands the foreclosure and loss mitigation process in order to be examined for possible eligibility.
http://www.latimes.com/business/la-fi-jpmorgan-doj-deal20131120,0,1814328.story#axzz2lBmlzirY