JPMorgan Chase & Co settled the latest in a string of legal claims on Tuesday when it agreed to pay $614 million to the US government and admitted that it defrauded federal agencies by underwriting sub-standard mortgage loans.
JPMorgan, the largest US bank by assets, said as part of the settlement that for more than a decade it approved thousands of insured loans that were not eligible for insurance by the Federal Housing Administration or the department of veterans affairs, according to court papers.
As a consequence, “both the FHA and the VA incurred substantial losses when unqualified loans failed and caused the FHA and VA to cover the associated losses,” the US justice department said in a statement.
JPMorgan is one of several banks that has faced similar allegations. Citigroup and Deutsche Bank have also reached settlements, while the justice department is seeking $2.1 billion in penalties from Bank of America after a jury found the bank liable for fraud over mortgages sold by its Countrywide unit.
Last year, JPMorgan agreed to about $20 billion in settlements in its drive to clear up legal claims. The deals covered claims over other mortgage issues, as well as derivatives and power trading.
The latest settlement was filed in US District Court for the Southern District of New York and was approved by Judge
J Paul Oetken, according to a statement from the US Attorney’s Office in Manhattan.
The bank said in a statement that the “settlement represents another significant step in the firm’s efforts to put historical mortgage-related issues behind it.”