How Will JP Morgan’s $13 Billion Settlement Help Homeowners?
Is any of this money going to, I don’t know, real people who were hurt in the mortgage crisis?
Yes, about $4bn is going to homeowners. Half of that is going to people who were hurt when they were unfairly foreclosed on.
The other half, per the New York Times, “JPMorgan has agreed to reduce interest rates on existing loans, offer new loans to low-income home buyers and keep those loans on its books. The bank will also receive credit for demolishing abandoned homes and other efforts focused on curbing urban blight.”
Okay, that makes me feel better. Will that money actually go to homeowners, however? I mean, I know they said it would, but what kind of impact will that really have?
The sad part is that, if history is any indication, the impact will be 1) hard to measure and 2) falling short of expectations. Remember the $25bn national settlement with five banks last year? The banks settled charges that they used bad paperwork. So far, those banks have “fulfilled only 80% of their obligations,” to homeowners, according to the New York Times.
Now, that’s not dire – it means that they’re $15.5bn of the way through on the $19bn they owe homeowners. But the other part of the settlement that was meant for states to distribute to homeowners did not go that way.
JP Morgan just finalized a $13 billion settlement with the Justice Department over investigations into toxic mortgage investments that helped start the financial crisis. Some of that money will be going to help homeowners who took out mortgages with JP Morgan, Bear Stearns and Washington Mutual—the latter two banks being acquired by JP Morgan in 2008. Our pal Heidi Moore has an explainer about where all the money will be going, and why JP Morgan was able to settle without admitting any wrongdoing, over at The Guardian.
Photo: David Shankbone