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US sets $13 bn mortgage settlement with JPMorgan Chase: source

People walk by JP Morgan Chase & Company headquarters in New York, August 14, 2013
People walk by JP Morgan Chase & Company headquarters in New York, August 14, 2013

US regulators have reached a $13 billion settlement with JPMorgan Chase to resolve numerous suits alleging poor mortgage practices, a person familiar with the matter told AFP Tuesday.

The settlement, the latest in a string of agreements over allegations the largest US bank by assets misled investors on mortgages, includes $4 billion in relief for consumers and $2 billion in penalties related to mortgage practices in California, the person said.

The deal also includes a previously announced JPMorgan settlement with the Federal Housing Finance Agency to settle claims JPMorgan misled investors on the quality of mortgage-backed securities sold to Freddie Mac and Fannie Mae. JPMorgan agreed to pay $4 billion to settle claims related to mortgage-backed securities and $1.1 billion on claims about single-family mortgages.

The settlement is also expected to resolve separate suits against JPMorgan by California, New York and other states.

JPMorgan in October reported a rare quarterly loss after taking a $9.2 billion charge for increased legal expenses.

The Justice Department settlement comes on the heels of earlier settlements totalling into the billions in other mortgage violations, manipulation of the electricity market and poor governance and investor disclosures related to the large "London whale" trading loss.

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