JP Morgan has
reached a $5.1bn (£3.2bn) settlement with the US Federal Housing Finance Agency
(FHFA) 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.
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.
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.
Fannie Mae and
Freddie Mac are the biggest mortgage lenders in the US. They received $187bn in
US taxpayer aid to help them stay afloat during the financial collapse.
They have since
repaid $146bn of the loan.
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