JPMorgan Working on $4.5B Deal with RMBS Investors

""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm announced Friday it has reached an agreement to pay billions of dollars to resolve claims from investors related to collapsed residential mortgage-backed securities (RMBS) issued between 2005-2008.

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As agreed to in the settlement, JPMorgan is offering $4.5 billion to trustees of 330 RMBS issued by J.P. Morgan, Chase, and Bear Stearns before the housing market's fall. The bank struck the deal with 21 major institutional investors, who have committed to support the settlement and requested that the trustees involved accept its offer.

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If approved, the settlement would resolve all representation and warranty claims as well as servicing claims on all trusts issued by the three banks during the bubble. It would not, however, resolve claims on trusts issued by Washington Mutual, which was acquired by JPMorgan in 2008.

According to a release from JPMorgan and the ""law firm representing the investors"":http://www.gibbsbruns.com/jpm-rmbstrusteesettlement/, the offer will remain open until January 15, 2014, but may be extended for an another 60 days.

The agreement is just the latest in JPMorgan's efforts to clean up the legacy mess created from the last decade's crisis. The country's biggest bank by assets is also working on a potential $13 billion deal with the Justice Department over similar issues.

In its own release, the bank called the settlement ""another important step in J.P. Morgan's efforts to resolve legacy related RMBS matters"" and said it has appropriate reserves to cover the payment ""and any remaining RMBS litigation matters.""