In accordance with the terms of its settlement with the government, JPMorgan has begun the process of providing debt forgiveness and other mortgage relief to struggling homeowners.
Joseph A. Smith Jr., who received a joint appointment from the bank and the government to monitor compliance with the terms of the agreement released his initial report Tuesday outlining the first steps taken in what will be a long process of the bank disbursing $4 billion in loan aid.
Under the terms of the agreement struck in 2013, the bank obtains credit for relief that it provides in four major categories: modification, rate reduction/refinancing, low income and disaster area lending, and anti-blight lending.
Some categories are worth more to the settlement than others so the credit given is not dollar for dollar. The report asserted that the bank has amassed $6.3 million in credit so far.
To get the credit, JPMorgan submitted 100 loans for review. Much more is still to come. Smith characterized the first steps as a “dry run”.
The bank has until 2017 to fulfill the requirements under the settlement and Mr. Smith maintains that there is not yet enough information to determine whether the bank is on schedule to complete them on time. A more thorough report is due out later this year.
The settlement was negotiated through the Residential Mortgage-Backed Securities Working Group, a joint state and federal unit formed in 2012 by President Obama to investigate wrongdoing within the mortgage-backed securities market that helped to trigger, contribute to, or exacerbate the U.S. financial crisis.
The settlement requires the bank to submit quarterly reports that include a limited random sample of loans as test cases for Mr. Smith to make the determination of whether they are living up to their obligations.