JPMorgan in $13B mortgage settlement

The U.S. Justice Department has announced a $13 billion settlement with JPMorgan Chase & Co. stemming from a probe relating to the bank's sale of mortgage bonds.

It's the largest amount ever paid by a financial firm in a government settlement, according to Bloomberg. 

Illinois’ pension system will receive $100 million as part of the settlement to resolve a civil investigation into the bank's violations of state and federal laws related to its marketing and sale of residential mortgage-backed securities.

The bank will pay $72.4 million to the Illinois Teachers Retirement System, $16.2 million to the State Universities Retirement System and $11.4 million to the Illinois State Board of Investment, the entity that oversees the State Employees' Retirement System, General Assembly Retirement System and Judges’ Retirement System.

The money will entirely repay the losses to the pension system for investments made in mortgage-backed securities issued by JPMorgan Chase, Bear Stearns and Washington Mutual before 2009.

Illinois' part of the national settlement follows an investigation by the Illinois Attorney General’s office that found that between 2005 and 2008, JPMorgan Chase failed to disclose the risks associated with investing in mortgage-backed securities.

"Today's settlement with Chase will assist Illinois to recover its losses from the dangerous and deceptive securities that put our economy on the path to destruction," Illinois Attorney General Lisa Madigan said in a statement.  

Illinois also will receive a portion of $4 billion of national relief directed to consumers, primarily in the form of mortgage loan principal write-downs and loan modifications to homeowners  who were harmed by the companies’ practices. That program is expected to be similar to the relief offered under the $25 billion national mortgage settlement negotiated by the five largest banks, the Justice Department and 49 attorneys general in February 2012.

Nationally, the $4 billion is expected to help 100,000 homeowners, according to the U.S. Department of Housing and Urban Development.

The exact sum of relief to be directed toward Illinois is being calculated, according to a spokeswoman for Illinois Attorney General Lisa Madigan.

An independent mortgage monitor will be appointed to oversee that portion of the settlement.