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Chase Correspondent Mortgage Production Soars

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Home loan originations shot up by a quarter at JPMorgan Chase & Co., though business remained down by nearly half from a year earlier. Correspondent acquisitions drove the increase and are likely to offset a fourth-quarter decline in retail originations.

Residential loan originations totaled $22.0 billion during the three months ended Sept. 30, the New York-based company reported in its third-quarter earnings data.

Business leapt from $17.6 billion in the prior period but came nowhere near the $41.1 billion in mortgage production during the third-quarter 2013.

Year-to-date mortgage originations were $57.2 billion.

Third-quarter 2014 activity reflected $21.2 billion in mortgage production and $0.789 billion in home-equity loan production.

Non-HEL volume included $7.9 billion in retail production, up 10 percent on a quarter-over-quarter basis, and $13.3 billion in correspondent acquisitions, soaring 39 percent.

Retail mortgage originations are set to decline in the fourth quarter based on new applications, which fell to $12.8 billion from $15.7 billion in the second quarter.

But correspondent production is poised for another improvement, with third-quarter applications rising to $17.1 billion from $14.4 billion.

Overall applications were mostly unchanged at $29.9 billion.

Chase said it serviced $766.3 billion in home loans for third parties. The servicing portfolio shrank from $786.2 billion as of June 30 and $831.1 billion as of Sept. 30, 2013.

The balance sheet contained $166.548 billion in residential loans, edging up from $166.458 billion at the end of the second quarter. At the same point last year, mortgage holdings were $170.486.

The most-recent number included $70.251 billion in HELs, $86.468 billion in prime mortgages and $9.337 billion in subprime mortgages.

The 30-day delinquency rate, excluding purchased credit-impaired loans, fell 19 basis points from the second quarter to 2.85 percent. The rate has improved by 96 BPS compared to the third-quarter 2013.

On the PCI portfolio, delinquency dropped to 13.69 percent from 14.08 percent and was 16.19 percent in the same quarter last year.

Prior to income taxes, the mortgage banking unit earned $0.724 billion, diminishing from the $1.168 billion earned in the second quarter. Earnings were $1.164 billion in the year-earlier period.

The report indicated that the decline was “driven by a lower benefit from the provision for credit losses, largely offset by lower non-interest expense.” But numbers would have been down even more had it not been for a reduction in headcount.

“Mortgage banking continues to reposition the business and manage through cyclical lows,” JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon said in the report.

Chase earned $7.7 billion at the bank-holding company level, slipping from $8.3 billion three months earlier but soaring from less than $0.1 billion a year earlier.

The report indicated that mortgage staffing has been reduced by 6,000 so far this year.

Staffing within the consumer and community banking division finished September at 138,686, down from 141,688 at the end of June. At the same point last year, there were 156,064 people in the unit.

Company-wide headcount closed out last month at 242,388. Chase cut its ranks from 245,192 in the previous quarter and 255,041 in the year-earlier period.

Chase ended the third quarter with 5,613 branches, 23 fewer than in the previous period.

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