JPMorgan Chase & Co. plans to let its portfolio of mortgages runoff. But the firm’s leader does see improvement ahead for the mortgage business.
In its second-quarter earnings report released Thursday, the New York-based company said that it owns $210 billion in mortgages. A year earlier, the portfolio was $238 billion.
Analyst Ed Najarian of ISI International Strategy & Investment asked in a conference call how long the roughly $30 billion year-over-year reduction in the home-lending portfolio might continue.
“Forever,” said JPMorgan Chairman and Chief Executive Officer Jamie Dimon. “It’s gonna go around 10 or 15 percent a year until it’s close to zero.”
Dimon explained that there is no more subprime lending, and jumbo investing is a balance-sheet decision.
Today’s report indicated that subprime holdings stood at $16 billion as of June 30.
But the CEO did acknowledge that home-equity lending will fall to a certain point then stabilize, though the balance of HEL investments will be a lot lower than where it stands now.
HEL assets ended June at $106 billion.
“We can buy or sell portfolios any time we want,” Dimon stated.
In response to a question by high-profile analyst Meredith Whitney, Dimon said he didn’t expect much impact from the expiration of temporarily higher agency loan limits.
He also confirmed the company’s commitment to home lending.
“At the end of the day, we’ll be in the mortgage business, and I think it will return to being a good business,” Dimon said. “It’ll be much more conservative, be much more carefully done, there’ll be much different servicing standards.”
