UPDATE 1-JPMorgan Chase agrees to pay $4.5 bln on mortgage security claims

Reuters

(Corrects dateline to Nov. 15)

By Karen Freifeld

NEW YORK, Nov 15 (Reuters) - JPMorgan Chase & Co said on Friday it has agreed to pay $4.5 billion to settleclaims by investors who lost money on mortgage-backed securitiesbefore the collapse of the U.S. housing market.

The bank reached the agreement with 21 institutionalinvestors in 330 residential mortgage-backed securities trustsissued by JPMorgan and Bear Stearns, which it took over duringthe financial crisis, according to the bank and lawyers for theinvestors.

The deal still has to be accepted by trustees for the trustsholding the securities, the parties said.

The settlement does not include trusts issued by WashingtonMutual, which JPMorgan also acquired.

The deal is separate from the preliminary $13 billionsettlemnet JPMorgan has reached with the U.S. government thatwould resolve a raft of actions over mortgage-backed securities.

"This settlement is another imoprtant step in J.P. Morgan'sefforts to resolve legacy related RMBS matters," the bank saidin a statement.

Under the agreement, trustees have until Jan. 15 to acceptthe offer, which may be extended for another 60 days, accordingto Gibbs & Bruns, the Houston law firm that represented theinstitutional investors.

The 21 investors include BlackRock Inc, Metlife Inc, Allianz SE's Pacific Investment Management Company, th eTCW Group and Bayerische Landesbank.

If accepted, the deal would resolve claims that JPMorgan andBear Stearns misrepresented the mortgages underlying thesecurities, JPMorgan said. It would also resolve servicingclaims on all trusts issued by the bank and Bear Stearns between2005 and 2008. (Reporting by Karen Freifeld; Editing by Gary Hill and DavidGregorio)

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