In their comments regarding JPMorgan Chase's second-quarter earning report, the analysts at Fitch Ratings, New York, gave a mixed outlook on the bank's residential mortgage business.
The analysts' opening comments noted JPM's results "did not present information that would prompt immediate rating action" and kept the company on Rating Watch Negative status.
As for their comments on the mortgage business, they stated that JPM's credit trends in this segment "continue on their positive trajectory."
But this is tempered by the fact that the government-sponsored enterprises have become more aggressive in seeking repurchases from loan sellers.
"Therefore, while JPM is seeing positive developments and actually reversed some of its provision related to repurchases ($10 million), timing and cure rates could result in future provisions.
“While Fitch believes that housing trends may see some stabilization, further weakening could result in a reversal in mortgage reserve releases or provisioning," the ratings agency said.
