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Chase Mortgage Originations Up But Poised to Fall

Mortgage originations climbed to the highest level since before the financial crisis at JPMorgan Chase & Co. But new loan applications suggest business will fall in the current quarter.

Residential loan production was $51.6 billion during the final three months of 2012, according to fourth-quarter earnings data released Wednesday. Business was better than any quarter since the first-quarter 2008, when volume totaled $53.8 billion.

Fundings picked up from the third quarter, when $47.7 billion was originated. It was also better than $38.9 billion in the fourth-quarter 2011.

The fourth quarter 2012 reflected $51.2 billion in home loan originations — including $26.4 billion in retail originations, $0.1 billion in wholesale volume, $22.3 billion in correspondent production and $2.4 billion generated through negotiated transactions.

Home-equity loan originations accounted for $0.4 billion of fourth-quarter business, no different than in the third quarter.

The latest activity brought full-year 2012 originations to $182.2 billion, increasing from $146.7 billion the previous year.

Business is likely to slow in the first quarter based on new loan applications, which fell to $65.7 billion from the third-quarter’s $73.2 billion. While correspondent applications were barely changed, retail applications fell 18 percent.

At $859.4 billion, the third-party mortgage servicing portfolio increased from $811.4 billion in the third-quarter . But Chase cut its servicing portfolio from $902.2 billion in the fourth-quarter 2011.

Chase’s mortgage investment portfolio finished last year at $177.326 billion down from $181.491 billion at the end of the previous period. Mortgage assets stood at $198.012 billion as of Dec. 31, 2011.

As of last month, the portfolio included $88.356 billion in home-equity loans, $75.456 billion in prime mortgages and $12.881 billion in subprime mortgages..

The rate of mortgages that were at least 30 days past due, excluding purchased-credit-impaired loans, fell to 5.03 percent from 5.12 percent as of Sept. 30. As of Dec. 31, 2011, the delinquency rate was 5.69 percent.

Repurchase liability finished last year at $2.8 billion. Chase trimmed its liability from $3.1 billion three months earlier and $3.6 billion a year earlier. The most-recent number reflected $0.3 billion in realized losses.

Outstanding repurchase demands tumbled to $3.0 billion from $4.1 billion as of Sept. 30.

The New York-based firm earned $0.7 billion before income taxes from its mortgage banking business. Income fell from $1.0 billion in the prior period but swung from a fourth-quarter 2011 $0.4 billion loss.

Full-year mortgage earnings swung to a $5.3 billion profit from a $3.3 billion loss.

“The real estate portfolios, while at elevated levels of losses, continued to show improvement as the housing market and economy continued to recover,” JPMorgan Chairman and Chief Executive Officer Jamie Dimon said in the report.

Fourth-quarter income before taxes for all units at the Wall Street giant came in at nearly $7.0 billion, falling back from $8.0 billion in the prior period but much stronger than $4.7 billion in the same period during 2011. Full-year earnings rose to $28.9 billion from $26.7 billion in 2011.

Staffing at Chase fell to 159,467 at the end of last year from 160,342 at the end of September and 161,443 at the end of 2011.

The banking giant operated 5,614 branches, more than the 5,596 as of Sept. 30.

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