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JPM Chase’s Mortgage Banking Income Rises as Cuts Continue

JAN 14, 2014 10:23am ET
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Real estate portfolios gave JPMorgan Chase’s overall mortgage banking net income a lift to $562 million in the fourth quarter of 2013 while home loan production declined again and servicing broke even.

Mortgage originations were about $23 billion in 4Q13, down 54% from the prior year and 42% from the prior quarter. Purchase originations of $13 billion were up 6% from the prior year and down 35% from the prior quarter. Loan performance is improving, says JPMorgan Chase CFO Marianne Lake.

The overall mortgage market is roughly flat in the first quarter and there is some continuation in expense improvement, Lake said in JPM’s earnings conference call Tuesday. “Revenues will continue to be challenged,” she says. Cuts are hitting servicing as well as originations.

Overall company net income in the fourth quarter was $5.3 billion, down from $5.7 billion during the same period last year.

JPM Chase’s mortgage banking net income in 4Q13 was up from a $143 million loss in 3Q13 and a $144 million gain in 4Q12.

Real estate portfolios generated more than $1 billion before income taxes. They had taken a loss before income taxes in 3Q13 of $258 million and generated $410 million in 4Q12.

Mortgage production took a $274 million loss before income taxes for the fourth quarter of 2013, but this represented an improvement from a loss of $364 million during the third quarter and a more than $1 billion loss before income taxes in a year earlier.

Servicing eked out a $2 million gain before income taxes in the fourth quarter, but this was down from $408 million experienced during the prior quarter and $915 million on an annual basis.

The company noted that during the quarter it made a lot of headway in resolving mortgage-related legal issues including a settlement of Fannie Mae and Freddie Mac repurchase claims.

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