Chase Fourth Quarter Mortgage Originations Slip

January 15, 2009 No Comments »


JP Morgan Chase, which boasted that it extended more than $100 billion in new credit during the fourth quarter, saw mortgage originations slip further.

Total fourth quarter home loan originations were just $28.1 billion, down 30 percent from the prior year and off 25 percent from the third quarter.

Meanwhile, home equity loan originations fell to just $1.7 billion, down $8.1 billion, or 83 percent from a year ago, and it’s no wonder why.

Prime mortgage charge-offs more than quadrupled to a rate of 0.89 percent, while subprime mortgage charge-offs nearly tripled to 5.64 percent and home equity charge-offs more than doubled to 2.15 percent.

Mortgage production revenue fell to $62 million, down $103 million, thanks to markdowns and an increase in reserves related to the repurchase of previously sold loans.

However, third-party loans serviced increased $557.9 billion, or 91 percent, to $1.2 trillion, thanks to its acquisition of Washington Mutual, which offset losses.

Interestingly, Chase said branch sales of credit cards increased 56 percent, which seems like a negative at this point, but I suppose time will tell.

Chase boss Jamie Dimon painted a bleak picture going forward, saying, “If the economic environment deteriorates further, which is a distinct possibility, it is reasonable to expect additional negative impact on our market-related businesses, continued higher loan losses and increases to our credit reserves,” in a statement.

He said Chase prevented more than 300,000 foreclosures since 2007, and plans to help another 300,000 families keep their homes over the next two years via loan modifications.

Earlier this week, Chase exited the wholesale lending channel to focus on mortgage lending via its enhanced retail bank branch channel.

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