JPMorgan Chase & Co. is closing down its remaining wholesale channel and will no longer offer prime mortgages through brokers, the New York banking company said Tuesday.
Spokeswoman Christine Holevas said in an interview with American Banker Tuesday that JPMorgan Chase had made a "strategic decision" to "no longer purchase loans originated by brokers."
The company will instead focus on direct-to-consumer originations, especially though its branches. The retail branch origination channel "has been a very, very successful channel for us," she said. "Customers like to work directly with their mortgage officers, and we have found that default rates are significantly lower."
JPMorgan Chase's purchase of Washington Mutual last year, which bulked up its branch network to more than 5,000, also contributed to the decision to focus on direct originations through retail mortgage and branch locations, Holevas said. This is the final step away from wholesale originations for JPMorgan Chase, which spent last year unwinding itself from that channel. It stopped offering subprime and home equity loans through third-party brokers in May, and stopped offering nonagency jumbo mortgages in August.
And in September, JPMorgan Chase announced plans to close four of its eight wholesale mortgage operations centers by the end of the year. Up to 800 employees may be eliminated along with the channel, although Holevas said,
"We don't think it's going to be that" drastic because of a spike in refinance applications. Because JPMorgan Chase's refinanced mortgages have nearly tripled, "we need underwriters" and others, she said. "We're redeploying talent."
She said the shutdown would take time to "wind its way through" the company and did not immediately know when it would be fully effective.
She would not discuss facilities, including the fate of the four remaining wholesale mortgage operations centers, which JPMorgan Chase said in September would be enlarged "to absorb processing from" the closed ones