JP Morgan on track to pay $4bn settlement

Apr 02, 2015, 12:39 PM EDT
A sign for a Chase bank branch is posted in Manhattan on February 24, 2015 in New York City.
Spencer Platt/Getty Images

An independent auditor found that JP Morgan Chase has paid more than half of its $4 billion settlement to homeowners over bad residential mortgage-backed securities it sold before the financial crisis. Joseph Smith, the monitor overseeing the settlement the largest U.S. bank reached in 2013 with the federal government and five states, credited Chase $2.2 billion out of the $4 billion goal it is required to provide to consumers by 2017, reports Reuters.The bank receives extra credit for certain types of help and less for others, so the total is not a dollar-for-dollar accounting of the assistance provided.

The relief comes in the form of mortgage forgiveness, refinancing and disaster area lending.Chase, JPMorgan's brand for consumer loans, must also pay $9 billion in cash, totaling a $13 billion settlement. "We are seeing steady progress from Chase," Smith said, noting the bank may meet its goal before deadline. Citigroup and Bank of America have also entered settlements for their role in the U.S. mortgage crisis.

"After in-depth formula testing and data review, I have credited Chase with more than half of the $4 billion in consumer relief credit it must provide under this agreement," Smith said, according to the M Report. "I look forward to reporting on my next round of testing mid-year. In addition to its consumer relief requirements, I have no reason to believe that Chase has failed to comply with any of the policy-based, non-creditable requirements of the settlement." The $2.24 billion in consumer relief with which Chase was officially credited has come in the form of principal reduction, loan modification, and refinancing for borrowers facing foreclosure. The breakdown of the $2.24 billion in consumer relief is as follows: $555.88 million in modification – forgiveness/forbearance, $791.76 million in rate reduction, and $898.04 million in low to moderate income and disaster area lending.