JPM Warns WaMu Loans Will Weigh on Credit Performance

JPMorgan Chase & Co., the nation's third largest mortgage lender, is warning that additional deterioration in the performance of its $117 billion home equity portfolio and $107 billion mortgage portfolio is likely. In a filing with the Securities and Exchange Commission, JPM said its initial analysis shows that "a substantial portion" of the consumer loans acquired from Washington Mutual are "credit impaired," and that fourth quarter results will show more details about the impact of falling home prices are having on "risk layered" loans. Chase's year-to-date loss provision includes $1.2 billion for home equity loans and $1.3 billion for prime and subprime mortgages. The company said that its non-interest expense also has increased to reflect higher mortgage reinsurance losses and increased servicing expense.