Fannie Mae Reaches Repurchase Agreement with J.P. Morgan Chase & Co.
$670 Million Agreement Compensates Taxpayers, Signals More Progress on Resolving Legacy Issues
WASHINGTON, DC – Fannie Mae (FNMA/OTC) has reached an agreement with J.P. Morgan Chase & Co. to resolve requests that J.P. Morgan Chase repurchase certain loans originated from 2000-2008. As a result, J.P. Morgan Chase will make a $670 million payment to Fannie Mae in the fourth quarter of 2013 and be released from repurchase liability for these loans, with certain exceptions.
“This agreement appropriately resolves our repurchase claims, compensates taxpayers for losses fairly and allows Fannie Mae and J.P. Morgan Chase to move forward as strong business partners,” said Timothy J. Mayopoulos, President and CEO of Fannie Mae. “One of our goals in 2013 was to put legacy issues behind us so we can focus on building a stronger housing finance system for the future. We have made significant progress, and will continue working with our customers to bring our representation and warranty claims to a satisfactory close."
J.P. Morgan Chase will remain obligated for certain other contractual responsibilities under the resolution agreement. Separately, the Federal Housing Finance Agency has announced a settlement with J.P. Morgan Chase over legal claims relating to private label securities that Fannie Mae purchased, which will result in an additional payment of $1.26 billion to Fannie Mae in the fourth quarter of 2013.
In addition to its agreement with J.P. Morgan Chase, Fannie Mae has reached resolutions this year with a number of lenders on repurchase issues and other matters, including:
- A $10.3 billion agreement announced in January 2013 with Bank of America including resolution of repurchase issues on certain loans, transfer of servicing rights on 941,000 loans, and repurchase of 30,000 loans by Bank of America. Additionally, the agreement included a $1.3 billion compensatory fee payment for servicing obligations.
- A $968 million agreement announced in July 2013 with Citigroup to resolve repurchase issues on certain loans
- A $373 million agreement announced in October 2013 with SunTrust to resolve repurchase issues on certain loans
Fannie Mae disclosed in its most recent 10-Q filing that as of June 30, 2013, it had completed reviews on 89% of the loans delivered from 2005-2008 for defects that would trigger potential repurchase requests and that the company expects to complete those reviews by the end of 2013.Fannie Mae enables people to buy, refinance, or rent a home.
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