JPMorgan Chase - Major Mortgage Loan Default Spike

As part of my day job at Field Check Group, Real Estate & Finance we analyze the entire housing & mortgage universe including extremely granular mortgage default and foreclosure data by lender, not available to most.

While JPMorgan Chase’s (JPM) mortgage modification announcement today makes a whole lot of sense from the stand point of ridding themselves of WaMu’s toxic Pay Option and Subprime loans at a better price than bulking them to the highest bidder, Chase has some problems with their own past loan originations as well.

JP Morgan to Modify Mortgages to Limit Foreclosures

By Elizabeth Hester

Oct. 31 (Bloomberg) - JPMorgan Chase & Co., the largest U.S. bank by market value, plans to modify terms on $110 billion of mortgages and forgo foreclosure proceedings on all real-estate loans while the changes are implemented in the next 90 days.

The offer extends to customers of Washington Mutual Inc., the savings and loan JPMorgan agreed to buy last month, the New York-based bank said today in a statement. Loan modifications may include interest-rate or principal reductions. The bank said it will establish 24 regional counseling centers to provide face-to- face help in areas with high delinquency rates.

“We felt it is our responsibility to provide additional help to homeowners during these challenging times,” said Charlie Scharf, chief executive officer of retail financial services at JPMorgan Chase. “We will work with families who want to save their homes but are struggling to make their payments.”

Remember, a few months back when Jamie Dimon said that they got aggressive in the mortgage market pushing products like Jumbo Prime especially hard in 2007? Well, below show the extent at which their past loan originations are turning into loan defaults.

This chart below represents the percentage increase in 2008 vs. 2007 in mortgage loan Notice-of-Defaults that each company originated. Granted some of these loans may have been sold, securitized etc, but they also kept a large number of originations which are likely performing at the same rate.  This chart shows which firms had serious mortgage related risk management lapses. This does not include second mortgages of which Chase is also loaded to the gills.

Please note this chart makes no reference to dollar volume, as that information is only available to clients. Sorry. However, I do feel that percentage change year-over-year is equally important.

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