The $4 billion portion of the deal would pay for write-downs of mortgage loans, demolition in blighted areas and lower monthly payments for homeowners, the person said Monday.
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, was involved with the negotiations which have come under the umbrella of a broader settlement between the bank and the U.S. Department of Justice, the person said.
Of the $4 billion, about $1.5 billion is to be earmarked for write-downs of loans that exceed the property value and as much as $500 million more would go for restructuring loans to lower monthly payments.
The agreement is to require JPMorgan (JPM) to spend the money by the end of 2016 under the watch of a independent monitor, the person said.
The final $13 billion deal is likely to be announced Tuesday, the person said. Another source familiar with the matter said earlier in the day that that announcement could be in the next day or two. Neither sources was authorized to speak on the record about the matter.
The total deal is also to include a $2 billion penalty and at least $4 billion for federal housing finance agencies under a previously announced agreement.
The fact that the $13 billion deal would include $4 billion for some form of "consumer relief" has been known for weeks. The details of how the $4 billion would be spent were reported earlier Monday by the Wall Street Journal (subscription required).