Chase Correspondent Channel Purchases Surge

Second-quarter residential originations were $41.7 billion, earnings data released today indicated. Activity increased from $38.6 billion in the first quarter but tumbled from $61.4 billion a year earlier. For the entire first half, fundings totaled $80.3 billion.

Home-equity loans accounted for just $0.6 billion of business, off from $0.9 billion the prior quarter. Second-quarter HEL volume was just a fraction of the $5.3 billion recorded for last year’s second quarter.

The correspondent channel accounted for the biggest share of second-quarter volume: $20.2 billion. Correspondent activity increased from $17.0 billion in the prior period.

Retail originations rose to $14.7 billion from the first quarter’s $13.6 billion, and wholesale production eased to $2.4 billion from $2.6 billion. Negotiated transactions were $3.8 billion, falling from $4.5 billion.

Including credit-impaired loans, Chase owned $135.9 billion in home-equity loans at the end of March, lower than $140.1 billion three months earlier. Prime mortgage holdings fell to $82.9 billion from $86.8 billion, and subprime home loans were cut to $20.2 billion from $21.2 billion. Option ARM assets ended at $39.5 billion off slightly from $40.2 billion.

Mortgages serviced for third parties were $1.1175 trillion on June 30, easing from $1.1488 trillion on March 31. On June 30, 2008 — before the acquisition of Washington Mutual Bank — the third-party servicing portfolio stood at just $0.6591 trillion.

Delinquency of at least 30 days on prime mortgages has climbed from just above 5.0 percent a year ago to 9.0 percent as of June 30, 2009. At the end of the first quarter, prime delinquency was around 7.2 percent.

Delinquency on HELs, excluding credit-impaired loans that were part of the WaMu acquisition, was about 2.8 percent at the end of June, improving slightly from 90 days earlier but way worse than around 2.15 percent 12 months earlier.

Subprime delinquency, which ended last month around 28 percent, was below 20 percent a year prior.

Retail financial services saw income slip to less than $0.1 billion from $0.5 billion in the first-quarter and a year earlier.

HEL quarterly losses are running at around $1.4 billion, while subprime quarterly losses are roughly $0.5 billion and prime mortgage losses are approximately $0.6 billion. These losses are expected to continue through the “next several quarters.”

Second-quarter net income of $2.7 billion from all of JPMorgan beat the first quarter by $0.6 billion and was $0.7 billion better than the second-quarter 2008.

Headcount in retail financial services ended the latest period at 103,733, climbing from 100,677 at the end of the first quarter and soaring from 69,550 reported for 12 months earlier.

JPMorgan employed 220,255 people company-wide as of June 30, up from 219,569 at the end of March and 195,594 one year prior.