JPMorgan to pay US$4 billion for consumer relief in deal with US government

JPMorgan Chase and US government officials have agreed on terms of a US$4 billion consumer relief package that is to be part of a US$13 billion deal to settle the bank’s liability to government agencies over mortgage securities, according to a person familiar with the matter.

The US$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 on Monday.

Shaun Donovan, secretary of the US 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 US Department of Justice, the person said.

Of the US$4 billion, about US$1.5 billion is to be earmarked for write-downs of loans that exceed the property value and as much as US$500 million more would go for restructuring loans to lower monthly payments.

The remaining US$2 billion would go for assorted measures, including new loans for low- and moderate-income borrowers in areas that have been hit hard by the housing crisis and demolition of abandoned homes, the person said.

The agreement is to require JPMorgan to spend the money by the end of 2016 under the watch of a independent monitor, the person said.