Law360, New York (January 30, 2015, 8:33 PM ET) — JPMorgan Chase & Co. will pay $99.5 million to exit an antitrust class action alleging the bank was part of a conspiracy to rig the approximately $5 trillion-per-day foreign exchange market, according to court documents filed Friday.
JPMorgan will pay $99 million to a group of pension funds, hedge funds and other investors plus $500,000 for administering the settlement fund under the deal and, crucially, has agreed to cooperate with investors as they press their case against other global banks named in the suit.
Prompted by concerns of New York banks not lending to minority groups after the mortgage and financial crisis in 2008, Attorney General Eric Schneiderman’s Civil Rights Bureau launched an investigation into the claims.
The investigation found that Five Star Bank’s lending area included most of the surrounding area around the city of Rochester, N.Y., but not the city itself or any area that consisted of predominantly minority residents. This went on from at least 2009 to 2013. During this time, the bank also enacted a policy that pronounced any property outside of their lending areas as an “undesirable loan type,” which discouraged borrowers from mostly minority areas.
It was also found that the bank rejected borrowers who were looking for a mortgage of $75,000 or less for seven out of 12 of the mortgage products they offered. Since the mortgage in the predominantly minority neighborhoods averaged less than Five Star’s cap, the policy was discouraging for residents who hailed from those communities.
This agreement between the attorney general and Five Star requires the bank to open two new branches in areas with at least a 30 percent minority population. One of the offices will be within at least two miles of a majority minority neighborhood, the second will be within one mile. Additionally, $250,000 will be devoted to advertising directed to minority communities, and $500,000 in discounts and subsidies on loans for minority neighborhood residents in the Rochester metro area is also included in the agreement.
The bank also has agreed to maintain its extended lending area, eliminate its minimum mortgage amount requirement, pay $15,000 in costs to the state of New York, provide live-fair training to its employees and submit to monitoring for the next three years.
The Federal Housing Finance Agency on Friday unveiled financial requirements for nonbank lenders that originate and service mortgages, a change designed to reduce risk at mortgage-finance companies Fannie Mae and Freddie Mac .
The proposed standards are directed at nonbank mortgage companies such as Ocwen Financial Corp. and Nationstar Mortgage Holdings Inc. These companies sometimes originate mortgages, but also buy from lenders the right to collect mortgage payments from borrowers, send payments to mortgage investors and process foreclosures.
The standards could affect the availability of mortgages to some borrowers because some nonbanks may need to divert resources to meet the requirements. On the other hand, the proposal appears to be less stringent than some analysts expected.
Nonbank lenders and servicers that do business with Fannie and Freddie will need to have a minimum net worth of at least $2.5 million plus 0.25% of the unpaid principal balances of all the mortgages they service, said the FHFA, which regulates Fannie and Freddie. Before, Fannie and Freddie set requirements based only on their own mortgages managed by the servicers.
The servicers will also need other liquidity requirements and a tangible net worth—excluding goodwill and other intangible assets—that is equal to at least 6% of the servicer’s total assets, a standard Fannie Mae already had in place.