JPMorgan Chase & Co has announced that it will pay US$4.5 billion to investors who suffered losses on residential mortgage-backed securities to settle claims.

Institutional investors, who invested in mortgage-backed securities issued by JPMorgan and Bear Stearns, had dragged the bank to court after they lost their money before the collapse of the U. S. housing market.

JPMorgan has reached an accord with 21 institutional investors in 330 residential mortgage-backed securities trusts, but the deal still has to be acknowledged by seven trustees administering the securities holdings.

Under the terms of the settlement deal, trustees can accept the settlement by 15th of January. The deadline may be extended for another sixty days.

Confirming the deal, JPMorgan said, "This settlement is another important step in JPMorgan's efforts to resolve legacy related R. M. B. S. matters. The firm believes it is appropriately reserved for this and any remaining R. M. B. S. litigation matters."

Washington Mutual-issued trusts, which JPMorgan also acquired, are not included in the deal.

Gibbs & Bruns' Kathy Patrick described the settlement deal as an "important milestone" in a three-year endeavor by the group of 21 institutional investors, which include BlackRock Inc, Metlife Inc, the TCW Group and Allianz SE's Pacific Investment Management Co.