|With a hefty retail lending force in place now that it has acquired Washington Mutual Bank, Chase has decided to abandon business from mortgage brokers. Correspondent business will still be accepted as long as brokers weren't involved in the origination.
The company issued a bulletin today indicating that Friday is the last day loan locks will be accepted on mortgage broker loans.
"We have decided to focus on loan originations through Chase bank branches, our consumer direct business and retail-originated loans acquired from correspondent lenders," the bulletin stated. "As a result of our strategic decision, we will no longer accept locks on any loans originated by brokers after Friday, Jan. 16, 2009."
A Chase spokesman couldn't confirm how many employees were impacted by the closing. But he did note that some of the affected underwriters and processors were expected to be redeployed to help with refinance volume.
An official company statement indicated that retail loans perform better than broker-originated mortgages because borrowers are better informed.
"We believe that Chase loan officers -- who know our customers and products best -- are in the best position to help families make choices to achieve and sustain homeownership," the statement said.
Loans from correspondent lenders will still be accepted as long as the loan was originated by the correspondent's own retail originators.
In September 2008, Chase Wholesale Lending announced it would close four regional centers and layoff 175 employees. A month earlier, the unit suspended wholesale jumbo programs, while three months prior to that it halted wholesale subprime and home-equity business.
Third-quarter 2008 wholesale originations were reported by parent JPMorgan Chase & Co. at $5.9 billion, while correspondent acquisitions were $13.2 billion. Retail business accounted for $8.4 billion.
One MortgageDaily.com subscriber called the move "monumental" and noted that lenders are seeking higher quality originations -- as is evident in how loans are underwritten and inspected for quality control.
In addition to broker business, Chase said it will no longer acquire bulk servicing in the correspondent business, though it will honor all existing contracts.
"Our new strategic direction is supported through the recent merger with Washington Mutual, which increased our bank branch inventory nationwide and enables us to serve nearly 70 percent of the American population," an announcement from Chase Rural Housing said.
The rural housing unit indicated that it is unaffected by the closing of the wholesale channel and will continue to accept wholesale business from mortgage brokers.
Chase noted that it will continue to offer its warehouse lending program. That program, however, is designed for loans headed for Chase.
"This decision has been an extremely difficult one, but in this current environment, we feel it is the most prudent one to make," the company stated.