FEDERAL HOUSING FINANCE AGENCY NEWS RELEASE
For Immediate Release
Contact:
Corinne Russell (202) 649-3032
October 25, 2013
Stefanie Johnson (202) 649-3030
FHFA Announces $5.1 Billion in Settlements with J.P. Morgan Chase & Co.
Settlements include private-label securities and representation and warranty claims
Washington, DC –
The Federal Housing Finance Agency (FHFA), as conservator of FannieMae and Freddie Mac, today announced it has reached a settlement with J.P. Morgan Chase &Co. and related companies for $ 4 billion to address claims of alleged violations of federal andstate securities laws in connection with private-label, residential mortgage-backed securities(PLS) purchased by Fannie Mae and Freddie Mac. Under the terms of the agreement, J.P.Morgan Chase & Co. will pay approximately $2.74 billion to Freddie Mac and $1.26 billion toFannie Mae to resolve certain claims related to securities sold to the companies between 2005and 2007 by J.P. Morgan Chase & Co., Bear Stearns & Co., Inc. and Washington Mutual.In separate settlements, J.P. Morgan Chase & Co. resolved representation and warranty claims with Fannie Mae and Freddie Mac related to single-family mortgage purchases by the twocompanies. Under the terms of the agreements, J.P. Morgan Chase Bank N.A. will pay a total of approximately $1.1 billion -- $670 million to Fannie Mae and $480 million to Freddie Mac.“The satisfactory resolution of the private-label securities litigation with J.P. Morgan Chase &Co. provides greater certainty in the marketplace and is in line with our responsibility forpreserving and conserving Fannie Mae’s and Freddie Mac’s assets on behalf of taxpayers. Thisis a significant step as the government and J. P. Morgan Chase move to address outstandingmortgage-related issues,” said FHFA Acting Director Edward J. DeMarco. “Further, I ampleased that a resolution of single family, whole loan representation and warranty claims could be achieved at the same time. This, too, will have a beneficial impact for taxpayers and thehousing finance market.”FHFA’s General Counsel noted, “Our lead representation by Philippe Selendy and the firm of Quinn Emanuel Urquhart & Sullivan was central to reaching this landmark settlement andtheir work continues in the remaining PLS cases. I want to cite the strong work of the FHFA Office of General Counsel’s litigation group under Stephen Hart and the legal and businessteams at Freddie Mac and Fannie Mae.“The settlement of the PLS litigation was initiated by U.S. District Court Judge Denise Cote’sdirection to undertake mediation of the PLS cases under her jurisdiction. The settlement also isaligned with the working group of federal and state authorities addressing claims related to
private-label securities and FHFA has and continues to work with all the government entitiesinvolved.”FHFA has now settled four of the 18 PLS suits it filed in 2011, and remains committed tosatisfactory resolution of the pending actions.The settlement agreement regarding private label securities claims between FHFA andJ.P. Morgan Chase & Co. involves the following cases:
FHFA v. JP Morgan Chase & Co.,et al.,
No. 121 CIV. 6188
(DLC) (S.D.N.Y.)(and other named defendants);
FHFA v. Ally Financial Inc., et al.
, 11 CIV. 7010 (DLC) (S.D.N.Y.);
FHFA v. First Horizon National Corp., et al.,
No. 11 Civ. 6193 (DLC)(S.D.N.Y.)
and
FHFA v. SG Americas, Inc., et al.,
No. 11 CIV. 6203 (DLC)(S.D.N.Y.)(Settlement Agreement follows; confidential filings omitted)
###The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.These government-sponsored enterprises provide more than $5.5 trillion in funding for the U.S. mortgage marketsand financial institutions.
EXECUTION COPYSETTLEMENT AGREEMENT AND RELEASE
This SETTLEMENT AGREEMENT AND RELEASE (the “Agreement”) is entered intoas of October 25, 2013 by and between (i) the Federal Housing Finance Agency (“FHFA” or“Plaintiff”), as Conservator of the Federal Home Loan Mortgage Corporation (“Freddie Mac”)and the Federal National Mortgage Association (“Fannie Mae,” and, together with Freddie Mac,“the GSEs”), Freddie Mac, and Fannie Mae, on the one hand, and (ii) JPMorgan Chase & Co.,JPMorgan Chase Bank, N.A., J.P. Morgan Acceptance Corporation I, J.P. Morgan MortgageAcquisition Corporation, J.P. Morgan Securities LLC (f/k/a J.P. Morgan Securities Inc.)(collectively, the “JPMorgan Legacy Entity Defendants”), Bear Stearns & Co., Inc., Bear StearnsAsset Backed Securities I LLC, EMC Mortgage LLC (f/k/a EMC Mortgage Corporation),Structured Asset Mortgage Investments II Inc. (collectively, the “Bear Stearns Legacy EntityDefendants”), WaMu Asset Acceptance Corporation, WaMu Capital Corporation, WashingtonMutual Mortgage Securities Corporation, Long Beach Securities Corporation (collectively, the“WaMu/Long Beach Legacy Defendants,” and together with the JPMorgan Legacy EntityDefendants and the Bear Stearns Legacy Entity Defendants, “JPMorgan”), David Beck, BrianBernard, Larry Breitbarth, Richard Careaga, Thomas W. Casey, Christine E. Cole, Art DenHeyer, David M. Duzyk, Stephen Fortunato, Katherine Garniewski, Keith Johnson, RollandJurgens, Joseph T. Jurkowski, Jr, William A. King, Suzanne Krahling, Thomas G. Lehmann,Kim Lutthans, Marc K. Malone, Thomas F. Marano, Jeffrey Mayer, Edwin F. McMichael,Samuel L. Molinaro, Jr, Michael B. Nierenberg, Diane Novak, Michael L. Parker, Matthew E.Perkins, John F. Robinson, Louis Schioppo, Jr, Jeffrey L. Verschleiser, Donald Wilhelm andDavid H. Zielke (collectively, the “JPMorgan Individual Defendants,” and, together withJPMorgan, the “JPMorgan Defendants”). The JPMorgan Defendants, together with FHFA andthe GSEs, are referred to herein as the “Settling Parties,” with each a “Settling Party.”
1
WHEREAS, on September 6, 2008, the Director of FHFA placed Fannie Mae andFreddie Mac into conservatorships pursuant to the Housing and Economic Recovery Act of 2008(“HERA”);WHEREAS, on or about September 2, 2011, FHFA, in its capacity as Conservator forFannie Mae and Freddie Mac, commenced an action against the JPMorgan Defendants in theUnited States District Court for the Southern District of New York, captioned
Federal HousingFinance Agency
v.
JPMorgan Chase & Co., et al.
, No. 11 CIV. 6188 (the “
JPMorgan
Action”);WHEREAS, on or about September 2, 2011, FHFA, in its capacity as Conservator forFannie Mae and Freddie Mac, commenced an action against JPMorgan Securities LLC (“JPMS”)and other defendants in the United States District Court for the Southern District of New York,
1
All terms with initial capitalization not otherwise defined herein shall have the meaningsascribed to them in Paragraph 1 herein.
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