Helped by interest in the government refinance program, mortgage applications ticked higher at JPMorgan Chase &Â Co. in an early indication of second-quarter business for all residential lenders. Nearly 10,000 people have been hired by Chase over the past year to support its mortgage operations, and its quarterly mortgage earnings have improved by more than $2 billion during the intervening period. When it comes to repurchase demands, the 2007 vintage is causing the most problems.
There was virtually no change in residential loan production between the fourth-quarter 2011 and the first quarter of this year at the venerable financial institution.
Chase’s quarterly earnings report reflected $38.4 billion in total mortgage production during the first three months of 2012. That worked out to more than 200,000 home loans.
The New York-based company’s closings were just shy of the $38.6 billion originated in the previous quarter. But volume improved from $36.2 billion in the first-quarter 2011.
In addition, new loan applications grew to $59.9 billion from $52.6 billion in the fourth quarter, a positive sign for business in the current quarter at both Chase and its competitors.
The most-recent results reflected $23.4 billion in retail originations, marginally higher than $23.1 billion in the previous period. But retail application volume climbed to $40.0 billion from the fourth quarter’s $34.6 billion, pointing to a nice second-quarter increase.
Correspondent business slipped to $14.2 billion from $14.9 billion, and negotiated transactions edged up to $0.8 billion from $0.5 billion. New correspondent applications, however, increased to $19.7 billion from $17.8 billion.
Chase additionally originated $0.312 billion in home-equity loans. HELÂ production rose from $0.277 billion three months earlier and $0.249 billion a year earlier.
The third-party mortgage servicing portfolio ended last month at $884.2 billion. Chase cut its portfolio from $902.2 billion at the end of December and $955.0 billion at the same point last year.
In addition, the company owned $192.401 billion in residential mortgages as of March 31, including $64.061 in credit-impaired loans inherited through the Washington Mutual Bank acquisition. Total holdings were reduced from $198.012 billion at the end of last year and $216.212 billion 12 months prior.
Of last month’s total real estate portfolio, home-equity holdings were $97.512 billion, down from $100.497 billion as of Dec. 31. Prime mortgages were trimmed to $80.038 billion from $82.157 billion, while subprime assets edged down to $14.159 billion from $14.640 billion.
The rate of 30-day delinquency fell for the second consecutive quarter to 3.01 percent. Delinquency was 14 basis points better than the prior quarter and 20 BPS below the rate in the same quarter of the prior year.
Dimon noted that positive credit trends for the consumer real estate portfolios were reflected in first-quarter results, though “with respect to our mortgage banking business, we expect to see elevated levels of costs and losses associated with mortgage-related issues for a while longer.”
Repurchase losses narrowed to $364 million from the fourth quarter’s $462 million but widened from $231 million during the first three months of 2011. Repurchase liability ended last month at $3.516 billion, a little lower than $3.557 billion at the end of last year but a little more than $3.474 billion as of March 2011.
In the latest quarter, 39 percent of the $1.641 billion in total repurchase demands received — or $0.645 billion — were for loans originated in 2007, a year when WaMu originated $138.3 billion. Another 45 percent of second-quarter demands for repurchase were originated in either 2006 or 2008.
“Mortgage production and servicing” swung from an $0.425 billion loss before taxes in the fourth-quarter 2011 to an $0.584 billion profit in the first quarter. The mortgage business suffered a $1.864 billion loss in same period a year earlier.
The mortgage results reflected “wider margins, driven by market conditions and mix, and higher volumes, due to a favorable refinancing environment, including the impact of the Home Affordable Refinance Programs,” the earnings report said.
Retail financial services swung from a $399 million loss in the first-quarter 2011 to a $1.753 billion profit during the latest quarter. Income was up from the fourth-quarter 2011’s $533 million.
Company-wide net income climbed to $5.383 billion from $3.728 billion in the fourth quarter. Income fell just shy of the $5.555 billion earned during the first quarter of last year.
Chase had a mortgage staff of 50,106 as of March 31. The number of employees in home lending grew from 49,189 as of Dec. 31. Headcount in real estate finance was only 40,396 at the end of March last year.
Retail financial services headcount climbed to 134,321 from 133,075 three months earlier and 118,728 a year earlier.
Branch count expanded to 5,541 branches from 5,508 at the end of last year.
