What the Chase Settlement Could Mean for Consumers

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The Justice Department and JPMorgan Chase & Co. reportedly could sign a $13 billion agreement today that would be the largest ever reached between the U.S. government and a corporation, several news sources are reporting. The final issue in the settlement was said by persons familiar with the talks (but not authorized to comment publicly) to concern $4 billion that would go to aid consumers. Here's a breakdown of how those funds from the nation's largest bank would be divided to aid homeowners, prospective homebuyers and others, according to the unnamed sources:

THE JPMORGAN CHASE DEAL -- HOW IT COULD HELP CONSUMERS:
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JPMorgan Chase Settlement's Effect on Consumers
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What the Chase Settlement Could Mean for Consumers
About $1.5 billion will go toward reducing the amount owed on home loans, reports The Associated Press, including those homeowners who are "underwater" on their mortgages. And The New York Times says that these funds will be directed at areas hard-hit by foreclosures. Analytics firm CoreLogic reported in September that 7.1 million borrowers -- 14.5 percent -- were in negative equity on their mortgages, with a high concentration of those underwater homes being valued at less than $100,000.
About $500 million will go toward the bank "briefly halting the collection of mortgage payments," says The New York Times. A little over 4 percent of mortgage holders in the U.S. were behind on their house payments by at least two months, as of September.

Some mortgage holders will see their interest rates reduced. Though interest rates are still at near-record lows, the demand for home-purchase loans and refinanced mortgages has fallen in recent weeks. Risky, high-interest loans were among the factors blamed for the housing collapse of the past decade, with minority groups reportedly being the primary targets of those products.

New mortgages will be directed toward low-income homebuyers. The percentage of first-time homebuyers in the housing market has fallen along with average incomes and savings during the recession, and many of those who are buying for the first time now tend to be older. Meanwhile, housing prices have seen their biggest rise in 2013 since before the housing crisis.
Cities that have been plagued by foreclosed and abandoned properties will be the target of efforts to revitalize or remove those homes. The number of abandoned homes in Detroit (pictured above) was estimated at 78,000, the Detroit Free Press reported in August.
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Previous stories about JPMorgan Chase:
JPMorgan's $13 Billion Deal Hits Stumbling Blocks
Why JPMorgan Settlement Could Make It Tougher to Get a Mortgage
Mortgage Modifications Still Taking Banks Too Long, Report Says

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