DHAKA: JP Morgan has reached a $5.1bn settlement with the US Federal Housing Finance Agency over charges it misled mortgage giants Fannie Mae and Freddie Mac during the housing boom.

A separate settlement with the US Justice Department is expected to be announced soon.

‘This is a significant step to address outstanding mortgage-related issues,’ the FHFA said in a statement, reports the BBC.

It is the biggest settlement ever by a US bank.

In a statement JP Morgan said the settlement resolves the biggest case against the firm relating to mortgage-backed securities.

The bank added that the agreement relates to ‘approximately $33.8 billion of securities purchased by Fannie Mae and Freddie Mac from JP Morgan, Bear Stearns and Washington Mutual’ from 2005 - 2007.

JP Morgan purchased Bear Stearns and Washington Mutual at the height of the financial crisis of 2008-2009, and has tried to argue that it should not be punished for mistakes made before those deals.

As part of the agreement with the FHFA, the bank will pay $4bn to Fannie Mae and Freddie Mac to settle claims that it violated US securities law.

It will pay the agencies an additional $1.1bn for misrepresenting the quality of single-family mortgages.

BDST: 1758 HRS, OCT 26, 2013
RoR/SRS