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Divvying up the $13 billion JP Morgan fine

JPMorgan Chase & Co.'s Manhattan headquarters.

Banking giant JPMorgan Chase reportedly has a tentative deal to pay a $13 billion settlement because of problematic mortgage investments it sold in the days before the financial crisis. 

The tentative deal is said to aside $4 billion for consumers, some of which could make its way to Laura Bradley. The Virginia woman lost her job during the downturn and says she asked JPMorgan to modify the loan on her family’s home. After much back and forth, a call finally came one night. The bank said no, unless Bradley’s family paid the $10,000 they were behind. It was the end.

“I didn’t have $10,000. So I said they’re gonna have to foreclose on our home,” Bradley remembers. “It was a very, very scary time.”

Later, they lost their home. Not enough is known about the settlement to confirm whether Bradley or someone like her would be eligible for anything.

Even though $4 billion is a giant number, homeowners shouldn’t expect much, considering the enormity of JPMorgan’s mortgage business.

“JPMorgan probably has five million mortgages, so we’re probably talking somewhere in the neighborhood of $800 per mortgage,” says Arizona State finance professor Andra Ghent.

That’s not going to do much for someone who lost their home and saw their credit score destroyed. But current homeowners in trouble could see meaningful benefits.

“The details of it are likely to be much like those of prior settlements, which have included modifications that help homeowners get out of these loans or enable them to carry them on terms that they are able to meet,” says Barry Zigas, who directs housing policy for Consumer Federation of America.

As for Laura Bradley, she has a job again. She and her family, now renters, have moved on.

“I think it is too little, too late,” she says about the settlement. “The only thing I ever wanted from our mortgage holder was the ability to stay in the home where I was raising my children. I say onward and upward and I don’t want anything from JPMorgan Chase.”

No settlement would undo the devastation of foreclosure. But JPMorgan customers who suffered and got nothing, may soon have something. And the settlement could set precedent for other big banks to make similar deals.

Mark Garrison: Some of that money might go to Laura Bradley, who lost her job during the downturn. She says she asked JPMorgan to modify the loan on her family’s Virginia home. But the only way to get that was to pay the ten grand they were behind. It was the end.

Laura Bradley: I didn’t have $10,000. So I said they’re gonna have to foreclose on our home. It was a very, very scary time.

Later, they lost their home. We don’t whether someone like Bradley would get anything. But even though the reported $4 billion dollars is a giant number, homeowners shouldn’t expect much. Arizona State finance professor Andra Ghent puts it in perspective.

Andra Ghent: JPMorgan probably has 5 million mortgages, so we’re probably talking somewhere in the neighborhood of $800 per mortgage.

That’s not gonna do much for someone who lost their home and saw their credit score destroyed. Barry Zigas of Consumer Federation of America says current homeowners in trouble could benefit.

Barry Zigas: The details of it are likely to be much like those of prior settlements, which have included modifications that help homeowners get out of these loans or enable them to carry them on terms that they are able to meet.

Laura Bradley has a job again. She and her family, now renters, have moved on.

Bradley: I think it is too little, too late. The only thing I ever wanted from our mortgage holder was the ability to stay in the home where I was raising my children. I say onward and upward and I don’t want anything from JPMorgan Chase.

No settlement would undo the devastation of foreclosure. But JPMorgan customers who suffered and got nothing, may soon have something. In New York, I'm Mark Garrison, for Marketplace.

About the author

Mark Garrison is a reporter for Marketplace and substitute host for the Marketplace Morning Report, based in New York.
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Despite my previous comment, heard today that the JPM settlement may actually contain money for "consumers." If those consumers are foreclosed home owners, I sure hope (lots of luck, jack) Marketplace does a story on why that group should get any funds from settlement of a claim that purchasers of mortgage backed bonds from JPM were harmed since JPM knew their quality was not as represented. Could our Dept of "Justice" have used this opportunity to further redistribute wealth to those who don't deserve it? Be sure to cover in that report the logic behind why a lender has responsibility for anything not contained in the loan documents when a borrower defaults, even if due to no fault of the borrower, such as when borrower loses their job. If the loan document doesn't say the borrower need not make payments if unemployed, then what is the issue? Lenders are not social agencies. Are we not all, individuals and companies, a country of law?

Agree wholeheartedly....the coverage of all this has been really salacious and reminds me of the clips of Affordable Care Act coverage that I've seen (rightly ridiculed by bloggers and columnists) from Fox News. I worry a lot that the financial crisis has caused NPR to check out its objectivity with respect to the banking sector.

For a financial show, you (Mr. Garrison, producer, writers, editors, etc.) sure don't know much about FINANCE! This settlement is regarding the sale of bonds after JPM presumably knew their quality was questionable. Therefore if anyone receives any of the settlement funds it would be those who bought the bonds then experienced a rapid and severe decline in the bonds' value. Consequently, your story should have been to report on who those buyers were (widows and orphans or pension funds and other banks), how much the buyers lost (and how does the settlement $ compare), who owns those bonds now and at what price if not the original owner, and how much JPM made on the on the mortgage originations and bond sales. Instead, you report on a homeowner who lost her job so defaulted on a JPM mortgage which then went to foreclosure. Not relevant. Glad she isn't expecting any money, but shame on you for asking her. BTW, are you aware of any mortgages (or other credit such as car loans and credit cards) which provide the borrower any relief from payments in the event of job loss or other hardship? It is unfortunate she and others lost their homes, but it has nothing to do with JPM selling bonds backed by those mortgages. So please keep your sympathies separate from your reporting - which is supposed to be (except apparently on public radio) unbiased, relevant and accurate.

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