An independent monitor ver
ified in his fourth report on JPMorgan Chase [1]'s progress under its November 2013 settlement with the government over the packaging and selling of faulty residential mortgage-backed securities that the bank has paid more than half of the $4 billion amount it agreed to pay toward consumer relief, according to an announcement [2] from independent monitor Joseph A. Smith, Jr. on Thursday.
Smith verified Chase's claim made in December [3] that the bank had provided $2.24 billion in consumer relief credit to 111,924 borrowers as of the end of the third quarter (September 30, 2014). Chase has until December 31, 2017 – nearly three full years – to pay the approximate remaining amount of nearly $1.8 billion of its obligation toward consumer relief under the settlement.
"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. "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.
In Smith's fourth report, Chase said it has provided $5.1 billion in principal forgiveness and forbearance, rate reduction, and low-to-moderate or disaster area lending to 39,512 borrowers as of the end of Q4 (December 31, 2014). Chase also claimed that 151,436 borrowers had received some type of relief, including $1.95 billion in principal forgiveness or forbearance, $1.11 billion rate reduction, and $15.77 billion in eligible lending. Those figures are awaiting validation from Smith.
Chase settled with the government in November 2013 for a then-record $13 billion amid claims that the bank, along with Bear Stearns and Washington Mutual, sold faulty residential mortgage-backed securities to investors prior to the financial crisis. Chase was required to make $9 billion in direct payments to government agencies and five states and provide $4 billion in consumer relief under the settlement.