JPMorgan Chase originated $34 billion of single-family mortgages in the second quarter, down 6% from the prior period as it continues to cut back on correspondent lending.
The megabank said correspondent originations (which entail the purchase of an already funded loan) totaled $10.3 billion in the second quarter, down 24% from the prior quarter and 60% since 4Q.
Chase (the name of JPM’s mortgage division) funded $20.7 billion of loans through retail means. The company said bank branch originations are up 34% year over year.
When asked about the coming reduction in government loan limits to $625,500 from $729,750, JPM chairman and chief executive Jamie Dimon said the impact will be minimal.
He noted that only 1% of Chase's volume is done in between those levels. "So, jumbos will be up a little bit and agencies will be down a little bit," he said.
Net charge-offs on its $143 billion mortgage portfolio came to $944 million, but the lender expects charge-offs will average $1.2 billion in the next two quarters.
"Embedded in our thinking is that home prices come down a little bit. There is still a lot of uncertainty," Dimon said.
The CEO noted that settlement negotiations with the Department of Justice and state attorneys are ongoing. "There could be changes to the way we modify and service loans,” he said. “In addition, there are foreclosure delays. So we are trying to be conservative."
Chase added $1 billion to its existing reserves in the second quarter to cover foreclosure delays and a possible settlement with DOJ and state AGs. "It is possible we are over-reserved," Dimon said, with regard to its mortgage exposure.
