JPMorgan Chase has reached a tentative $4 billion deal with the U.S. Federal Housing Finance Agency to settle claims that the bank misled government-sponsored mortgage agencies about the quality of mortgages it sold them during the housing boom, the Wall Street Journal reported Friday.
The deal is for less than the $6 billion the agency initially sought, the Journal said, citing people close to the discussions.
A spokesman for JPMorgan declined to comment as did a spokeswoman for the FHFA.
JPMorgan and the FHFA, which is pursuing claims on behalf of finance agencies Fannie Mae and Freddie Mac, have worked up a general agreement that the bank wants to wrap into a larger deal with the U.S. Department of Justice, the Journal said.
The bank and the Department of Justice have discussed a broader deal under which JPMorgan would pay a total of $11 billion, including $7 billion of cash and $4 billion of consumer relief, to cover claims from the FHFA and other government agencies.
JPMorgan is seeking a single settlement to resolve all claims from federal and state agencies over its mortgage-related liabilities stemming from the bust in house prices.
A final deal between the bank and the FHFA is unlikely to happen outside of a broader pact, a person familiar with the matter told Reuters.
CEO Jamie Dimon went to Washington to meet with U.S. Attorney General Eric Holder on September 26 to advance those discussions, but a deal has not been forthcoming.
Earlier this week, JPMorgan agreed to pay $100 million and admit its traders engaged in reckless behavior to settle charges that it manipulated markets as part of its so-called London Whale trades in 2012.
When it released its third-quarter earnings report, CEO Jamie Dimon said the country's largest bank had set aside $23 billion for legal issues.