JP Morgan Chase, which today reported a third-quarter profit of $527 million, saw mortgage loan origination volume plummet over the past three months.
The company said quarterly home loan originations totaled $37.7 billion, down four percent from the same period a year ago, but off 33 percent from the $56.1 billion reported in previous quarter.
Home equity originations totaled just $2.6 billion, less than half the $5.3 billion recorded in the second quarter and down $8.6 billion, or 77 percent, from the same period a year earlier.
The slowing in loan production came as mortgage-related charge-offs continued to rise.
Net charge-offs on home equity loans increased to $663 million from $150 million a year ago, subprime charge-offs increased to $273 million from $40 million, and prime mortgage charge-offs jumped to $177 million from $9 million.
During the quarter, Chase reduced mortgage-related exposure by over 40 percent, including $2.6 billion in net markdowns and $11.8 billion in sales.
The mortgage lender now has total exposure of $18.6 billion, down from $33 billion in the second quarter, with $8.1 billion in prime and Alt-A that is “difficult to hedge effectively,” $1.2 in subprime, and $9.3 billion in commercial mortgage-backed securities.
Total third-party mortgage loans serviced increased $81.8 billion, or 14 percent, to $681.8 billion as of the end of the quarter.