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JPMorgan Chase’s bombshell announcement – mortgage division winding down?



Chase bank projection in Fulton Market, Chicago. Photo by Seth Anderson.

Washington Mutual and JPMorgan Chase

In 2008, the Federal Deposit Insurance Corporation (FDIC) seized Washington Mutual Bank (WaMu), then facilitated its sale to JPMorgan Chase.

Since the sale, the economic crash has deepened and endless lawsuits from individuals, state agencies and federal agencies, putting banks like Chase at the center of investigations and lawsuits. Chase was most recently sued for reporting to credit agencies that one of their live mortgage holders was dead, allegedly destroying her credit, and in April, the bank settled a class action suit by military homeowners for $48 million due to illegal foreclosures. The bank has even attracted an advocacy group that came to their corporate headquarters and performed an exorcism.

Mortgage division winding down over time? Not exactly.

In June, Chase ejected their head of home lending for the bank’s tarnished record. The Seattle Times is reporting that Chase CEO Jamie Dimon stated today that they are winding down their $154 billion mortgage portfolio, reducing its size by 10-15% per year until it gets “close to zero.”

Fifty states attorneys general have named JPMorgan Chase and numerous other banks as the center of their mortgage probes, which Dimon stated he would prefer to settle now rather than over the years it will likely take as each state probes individually with separate penalties.

Without naming any specific incidents, Dimon affirms the many errors made in the mortgage division that has led to the paced reduction of their portfolio.

The biggest drag on the bank has been WaMu

Despite errors, it appears that the biggest drag on the bank has been the acquisition of WaMu and their portfolio. On an industry call, Dimon reported that WaMu mortgages account for 10% of the current Chase portfolio. The bank has set aside $4.91 billion of its $28.5 billion loan-loss allowance specifically for WaMu loans, a disproportionate amount to the small percentage of the Chase portfolio it accounts for.

Chase holds $69 billion in former WaMu loans, and 26.2% of those are 30 days or more past due whereas Chase’s loans are barely at 6% delinquent, a major disconnect between the two portfolios despite sharing an umbrella. Dimon’s demeanor was no longer snide as it have been in the past, and although not exactly dripping in humility, it is clear that the undoing of the entire portfolio is what Dimon sees as the bank’s way to stay afloat.

More regulations are on the way and in one week, we have seen MetLife opt to shut down their retail bank and JPMorgan Chase shut down their mortgage portfolio. Time will tell if more divisions, portfolios or banks will wind down as investigations and regulations are enforced.

Chase weighs in on their big picture

Christine Holevas of Chase’s Media & Communications division said in a statement to AGBeat, “Our owned portfolio is approx $220billion and a lot of that are products that we no longer use – the option ARMs, subprime, high CLTV home equity lines, etc. That is what Jamie and others have said we are winding down. However that does not mean we are ending our mortgage division – far from it.”

“We continue to provide customers with traditional home lending products – 15yr, 30yr fixed, some ARMs and home equity loans – however, those are products that are then sold to Fannie, Freddie, FHA, VA, so they don’t stay in our owned portfolio. We do keep jumbo loans, but the volume of those compared to conforming loans is very small. That’s why we say that our mortgage holdings will be ‘almost nothing,'” Holevas added.

Further, Holevas told us, “We will continue to originate new mortgages and home equity products, in addition to our home loan servicing business. In fact, during the past 18 months we have hired more home loan officers, put them in our branches across the country and in markets that we don’t have a branch presence.” [July 28, 3:08PM]

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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    July 28, 2011 at 6:41 am

    dirty corporate pieces of garbage. how do they like that taste??

    TPG gets paid…. ABIGHAMMER GETS PAID !!!!! TASTE THAT !!!

    my trained eye sees all !!!

  2. Joe Loomer

    July 28, 2011 at 7:35 am

    So was the "dead" homeowner a WAMU holdover? Were the military folks? Seems a culture shift in their customer service department would be smarter than divesting a portfolio worth hundreds of billions. A six-percent delinquency rate tells me they're doing their legwork when originating, why not sell off the WAMU loans? There's more to this than meets the eye – perhaps that six-percent is self-reported…

    Navy Chief, Navy Pride

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Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?



Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.



aging housing inventory

aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.



zillow move

zillow move

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub,, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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