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Chase Sees Growth in Correspondent Lending, Lower Margins

JAN 16, 2013 10:12am ET
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JPMorgan Chase reported single-family originations of $51.2 billion in the fourth quarter, up 8% from the third quarter and 33% a year ago.

Mortgage banking income totaled $418 million, compared to a $205 million loss in the quarter prior.

In reporting fourth-quarter results Wednesday morning, chairman and chief executive Jamie Dimon said Chase originated over 920,000 mortgages in 2012, completed over 610,000 loan modifications and provided over $10 billion in principal forgiveness to underwater borrowers.

“We are committed to do our part to speed the recovery of the housing market,” Dimon said.

Origination volume reflected strong refinancing activity and an increase in correspondent lending, according to Chase chief financial officer Marianne Lake.

Correspondent lending totaled $22.3 billion in the fourth quarter, compared to $20 billion in the prior quarter. Chase shuttered its wholesale lending business two years ago. Retail originations totaled $26.4 billion, up slightly from $25.5 billion in the third quarter.

The CFO indicated that margins peaked in the third quarter and “we do expect them to continue to normalize going into 2013.”

Mortgage banking income was impacted by an independent foreclosure review settlement of about $700 million.

Lake noted Chase completed the closing of the MetLife Bank servicing portfolio during the fourth quarter.

The $70 billion of “high quality agency servicing” will provide additional HARP refinancing opportunities, Lake said.

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