JPMorgan settles claims over faulty mortgages
FRESNO, Calif. (KFSN) -- A Landmark settlement was announced by the Justice Department for one of the biggest players in the housing market crash. The nation's largest bank, J.P. Morgan Chase has agreed to pay a record $13 billion dollars to settle claims over the sale of faulty mortgages.
Throughout the Valley there are rows of empty houses. The previous homeowners just couldn't afford to live here because of faulty mortgages. "There's nobody that I know that has been in some way affected. Home ownership has always been called the American dream and I have to tell you it's been more like the American nightmare for a lot of people," said John Shore.
Shore with the Community Housing Council has seen thousands of risky loans result in foreclosures. "Of all of the states, California has been hit the hardest by far and ground zero has pretty much been known as Sacramento down to Bakersfield and guess what? Fresno is right in the middle of that," he added.
On Tuesday banking giant, J.P. Morgan agreed to a multi-million dollar settlement to help those impacted. Housing analysts say by selling toxic loans, the bank played a key role in the economic downturn. "Some of them were missing appraisals, some were missing buyer information. I mean these loans were bundled up sold to these investors and these were not quality loans," said Paul Salazar with Principal Home Loans.
In the settlement 4 billion is set aside for mortgage relief to states including California. Experts say those who have already walked away from their mortgages won't benefit from the deal. But the people who are currently struggling to remain in their homes and have an overvalued mortgage will get some relief. "What that means is that they are going to get a credit and it's not so much that J.P. Morgan is going to give out every individual affected by this, money," added Salazar.
Analysts believe J.P. Morgan will now offer principal reductions rate reductions and modifications on existing home loans.
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