NEW YORK -- JPMorgan Chase and U.S. government officials have agreed on terms of a $4 billion consumer relief package that is to be part of a $13 billion deal to settle the bank's liability to government agencies over mortgage securities, according to a person familiar with the matter.
The $4 billion portion of the deal would pay for write-downs of mortgage loans, demolition in blighted areas and lower monthly payments for homeowners, the person said Monday.
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, was involved with the negotiations which have come under the umbrella of a broader settlement between the bank and the U.S. Department of Justice, the person said.
Of the $4 billion, about $1.5 billion is to be earmarked for write-downs of loans that exceed the property value and as much as $500 million more would go for restructuring loans to lower monthly payments. %VIRTUAL-article-sponsoredlinks%The remaining $2 billion would go for assorted measures, including new loans for low- and moderate-income borrowers in areas that have been hard-hit by the housing crisis and demolition of abandoned homes, the person said.
The agreement is to require JPMorgan (JPM) to spend the money by the end of 2016 under the watch of a independent monitor, the person said.
The final $13 billion deal is likely to be announced Tuesday, the person said. Another source familiar with the matter said earlier in the day that that announcement could be in the next day or two. Neither sources was authorized to speak on the record about the matter.
The total deal is also to include a $2 billion penalty and at least $4 billion for federal housing finance agencies under a previously announced agreement.
The fact that the $13 billion deal would include $4 billion for some form of "consumer relief" has been known for weeks. The details of how the $4 billion would be spent were reported earlier Monday by the Wall Street Journal (subscription required).
Forbes' World’s Most Powerful People List, 2013 Edition
JPMorgan, Gov't Set Terms for $4 Billion Piece of $13 Billion Deal
Who’s more powerful: the omnipotent head of a corroding but still feisty power or the handcuffed head of the most dominant country in the world? This year’s snapshot of power puts the Russian president on top. Putin has solidified his control over Russia (“dictator” is no longer an outlandish word to ponder) and the global stage. Anyone watching the chess match over Syria has a clear idea of the shift in the power towards Putin. The ex-KGB strongman -- who controls a nuclear-tipped army, a permanent seat on the UN Security Council and some of the world's largest oil and gas reserves -- is allowed to serve two more terms, which could keep him office until 2024.
His signature legislation, Obamacare, is under fire, U.S. allies are outraged over NSA surveillance overseas, and the government shutdown for 16 days in October begs the question: Who's in control here? It appears that President Obama's lame duck period has set in earlier than usual for a two-term president, causing him to drop one notch from the No. 1 spot. To be sure, though, the leader of the free world remains in charge of the most powerful nation in the world, with the largest, most innovative economy and the deadliest military.
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