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34 JPMORGAN CHASE CLOSE TO FULFILLING RMBS SETTLEMENT OBLIGATION JPMorgan Chase has fulfilled nearly all of its required $4 billion consumer relief obligation under the terms of the 2013 Residential Mort- gage-Backed Securities Settlement, according to a recent report from the office of independent monitor Joseph A. Smith, Jr. In Smith's seventh report on Chase's prog- ress toward fulfilling the settlement obligations, he credited the bank with more than $126.2 million in consumer relief to 3,695 borrowers through the end of the second quarter of 2015 (June 30, 2015). e bank is well on track to fulfill its con- sumer relief obligation under the terms of the settlement by the deadline of December 31, 2017. rough seven reports covering up until the end of Q2 2015, Smith and has team have credited JPMorgan Chase with more than $3.68 billion in consumer relief to 161,802 borrowers, giving the bank two and a half years (starting with the beginning of Q 3 2015) to provide the remaining $320 million. "My team and I performed an in-depth review of Chase's consumer relief activities. As a result, I have credited Chase with $3.68 billion in consumer relief," Smith said. "I will continue to monitor and report on Chase's progress toward providing $4 billion in credited consumer relief by December 31, 2017." Chase released the following statement regarding the Monitor's report: "We continue to help thousands of families become homeown- ers and assist those who may be struggling. We have helped over 165,000 families through nearly $20 billion in total mortgage relief." All of the consumer relief Chase provided in Q2 2015—all 3,695 loans and $126.2 million— was in the form of forgiveness or forbearance. About $52.9 million of the relief came in the form of principal forgiveness on first liens (cov- ering 851 loans); about $24.7 million of the relief came in the form of forbearance on first liens (covering 1,540 loans); and about $48.6 million of the relief came in the form of principal forgive- ness on second liens, including extinguishments. e total of consumer relief Chase has provided in forgiveness/forbearance is $1.84 billion, approximately half of the relief the bank has provided through the end of Q2 2015. Chase has also provided consumer relief in the form of $874.4 million in rate reduction and $1.17 billion in low-to-moderate income and disaster area lending through the end of Q2 2015. Chase self-reported an additional $206.2 million in consumer relief for the third quarter of 2015, which Smith and his team are in the process of confirming. Should this amount be confirmed, it would give the bank $3.88 billion in consumer relief toward the obligation. Smith said he will report his team's findings in the spring. Chase settled with the government in No- vember 2013 for a then-record $13 billion amid claims that the bank, along with Bear Stearns and Washington Mutual, sold faulty residential mortgage-backed securities to investors prior to the financial crisis. Chase was required to make $9 billion in direct payments to government agencies and five states and provide $4 billion in consumer relief. Chase's $13 billion settlement remained a record amount for a single private institution settling with the government un- til Bank of America settled for $16.65 billion in August 2014 over similar claims of selling faulty mortgage-backed securities. CONSUMER EXPECTATIONS ARE LOWER ACROSS THE BOARD e President spoke of optimism for America's future in his final State of the Union Address on January 19. A recent survey from the Federal Reserve Bank of New York found that he may not have much company as far as that optimism, however. Consumers appear to be less optimistic about their future with regard to the economy, the job market, and personal finances, accord- ing to the New York Fed's December 2015 Survey of Consumer Expectations (SCE). e metric that took a big hit was median one-year earnings growth expectations, which dropped from November's 2.5 percent to 2.0 percent in December, which was the level it hovered around for the second half of 2015. is was the largest drop for this metric since the SCE's inception in June 2013. "e decline was widespread across all age groups, and especially strong for low-education and middle-income workers," the SCE stated. at was far from the only data point in which consumer optimism declined, however. One-year ahead median household income growth expectations continued a declining trend, this time from 2.6 down to 2.3 percent— seemingly driven by younger, higher education, and higher income respondents, according to the New York Fed. at percentage fell in the 2.7 to 2.9 range for the first three quarters of 2015. e median home price change fell to 3.0 percent in December, driven by older and lower income respondents. is level matched the previous all-time low for median home price change, reached twice in February and August of 2015. Inflation uncertainty (uncertainty regarding future inflation outcomes) reached new series lows at both the one-year and three- year ahead horizons (2.40 and 2.54 percent, respectively) in December, and median inflation expectations remained flat at a series low for the one-year ahead horizon at 2.5 percent. Also according to the SCE, one-year ahead median household spending growth expecta- tions took a sharp decline from 3.6 percent down to 2.9 percent down to its lowest level since the survey began two and a half years ago. Unlike the decline in income growth expecta- tions, however, the decline in household spend- ing expectations was driven by older, lower education, and lower income respondents, the SCE reported. While the mean probability of losing a job declined from 14.1 percent to 13.5 percent, the second lowest level since the beginning of the survey, the mean probability of finding a job in the next three months if a job loss were to occur also fell from its series high of 55.1 percent in November, according to the SCE. At the same time, the mean perceived probability of voluntarily leaving a job dropped slightly in December and is near an all-time low. "The decline was wide- spread across all age groups, and especially strong for low-education and middle-income workers."

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