JPMorgan Chase will pay $4 billion to settle allegations that it sold billions of dollars worth of bottom-quality mortgages to state housing finance companies, the Wall Street Journal said Friday.

The Journal said JPMorgan had reached a deal to settle the charges that it overstated the quality of the mortgages it sold on to Fannie Mae and Freddie Mac, resulting in significant losses for the two companies that required government bailouts.

The deal would be less than the $6 billion originally sought by the Federal Housing Finance Agency, which oversees Fannie and Freddie, the Journal said.

It said the bank hoped to wrap that settlement into a larger deal, possibly $11 billion, to get past a range of charges of misbehavior dating to the financial crisis that involve the Justice Department and other agencies.

"The FHFA agreement won't likely be finalized until either a broader deal with the Justice Department is reached or the parties abandon those larger talks," the Journal said citing people close to the talks.

Neither the bank nor the agencies would comment on the report.