Summary
JPMorgan Chase & Co. (JPM) announced on January 25, 2016, a significant settlement agreement with bond insurer Ambac Assurance Corporation and its Segregated Account. This agreement resolves two major disputes related to approximately $3.3 billion in principal and interest payments on residential mortgage-backed securities (RMBS) trusts sponsored by EMC Mortgage LLC, an indirect subsidiary of JPMorgan Chase. Under the terms of the settlement, JPMorgan Chase will pay $995 million to Ambac. Importantly, this settlement also includes the withdrawal of Ambac's objection to a previously announced $4.5 billion settlement with trustees of 319 RMBS trusts issued by J.P. Morgan, Chase, and Bear Stearns. The company has stated that this $995 million settlement is not expected to have a material impact on its earnings for the first quarter of 2016.
Key Highlights
- 1JPMorgan Chase reached a settlement with Ambac Assurance Corporation and its Segregated Account on January 25, 2016.
- 2The settlement resolves disputes concerning approximately $3.3 billion in RMBS trusts sponsored by EMC Mortgage LLC.
- 3JPMorgan Chase will pay $995 million to Ambac as part of the settlement.
- 4Ambac will withdraw its objection to a separate $4.5 billion settlement with RMBS trust trustees.
- 5The $4.5 billion settlement involves 319 RMBS trusts issued by J.P. Morgan, Chase, and Bear Stearns.
- 6JPMorgan Chase expects no material effect on its first-quarter 2016 earnings from this settlement.