A weak loan origination system and an increase in the share of delegated correspondent business has the originator rating of JPMorgan Chase & Co.’s banking subsidiary being downgraded.
Single-family loan originations — including jumbo mortgages — at the entire Chase organization during the 69 months that concluded on Sept. 30, 2017, amounted to $745 billion.
During that period, jumbo residential loan production accounted for $147.1 billion of the 69-month total. That worked out to 187,980 jumbo mortgages.
A news release last week from Moody’s Investors Service indicated that during the 5.75 years, the correspondent channel was responsible for 63 percent of production, while 37 percent came from retail and consumer-direct channels. Moody’s noted that the correspondent sellers have delegated underwriting authority.
As a result of the growing correspondent share, which has widened 2.5 times since the last review, Moody’s lowered its assessment of JPMorgan Chase Bank, N.A.,’s property valuation and underwriting policies and procedures.
Also lower was Moody’s assessment of the bank’s technology.
“Chase’s new loan origination system, Mortgage Express, is not visually intuitive and lacks innovations which we have seen in other systems,” the ratings agency stated. “Chase’s new LOS system is unique in that it uses a character user interface, compared to the graphical user interface technology typically used by other originators that we have assessed. ”
Based on its assessment, Moody’s lowered Chase Bank’s prime jumbo residential mortgage originator assessment to ‘above average’ from ‘strong.’
