On October 25, 2013, the Federal Housing Finance Agency (“FHFA”), as conservator of Fannie Mae and Freddie Mac, announced that it will receive settlement payments of $5.1 billion with J.P. Morgan Chase & Co. in connection with claims of alleged violations of federal and state securities laws related to private-label, residential mortgage-backed securities purchased by Fannie Mae and Freddie Mac.

The larger settlement involved claims related to securities sold to the companies between 2005 and 2007 by J.P. Morgan Chase & Co., Bear Stearns & Co., Inc. and Washington Mutual. To resolve these claims, J.P. Morgan Chase & Co. agreed to pay approximately $2.74 billion to Freddie Mac and $1.26 billion to Fannie Mae.

In separate settlements, J.P. Morgan Chase & Co. agreed to pay $670 million to Fannie Mae and $480 million to Freddie Mac to resolve representation and warranty claims with Fannie Mae and Freddie Mac related to their purchases of single-family mortgages.

Settlements “do not constitute any liability or wrongdoing”

The settlements did not “constitute an admission by any of the JPMorgan Defendants of any liability or wrongdoing whatsoever” and were therefore favorable, in that sense at least, to J.P. Morgan Chase & Co. because admitting wrongdoing could have increased its exposure in private mortgage repurchases lawsuits.

The settlement agreement regarding private label securities claims between FHFA and J.P. Morgan Chase & Co. involves the following cases: Federal Housing Finance Agency v. JPMorgan Chase & Co., et al., No. 11 CIV. 6188 (S.D.N.Y.); Federal Housing Finance Agency v. First Horizon Nat’l Corp., et al., No. 11 CIV. 6193 (S.D.N.Y.); Federal Housing Finance Agency v. SG Americas, Inc., et al., No. 11 CIV. 6203 (S.D.N.Y.); and Federal Housing Finance Agency v. Ally Financial Inc., et al., No. 11 CIV. 7010 (S.D.N.Y.).