JPMorgan Chase suffered $1.5 billion of mortgage repurchase losses in the third quarter due to loan buybacks from secondary market investors (mostly the GSEs) but its residential lending unit still managed to post positive earnings in the quarter.
Wednesday morning the company reported that its mortgage banking/consumer lending unit earned $207 million in 3Q. However, the profit was off 50% from the same quarter last year.
Excluding the loan buyback related charges, JPM's mortgage origination business posted net revenue of $1.2 billion in 3Q — an $838 million improvement from the prior period.
The much improved mortgage revenue number was driven by what it called "higher mortgage origination volumes and wider margins."
Chase posted mortgage servicing revenue of $936 million.
Chase (the name of JPM's mortgage banking division) ranks third among all lenders and servicers, according to figures compiled by National Mortgage News and the Quarterly Data Report.
JPM officials acknowledged a "continuation of a high level of requests for loan files from the GSEs as well as purchase demands." Its buyback reserves now total $3 billion.
The entire bank/investment bank earned $4.4 billion in the quarter, a 23% rise from 3Q09.