JPMorgan Wary of FHA Business

boxing-glovesDoes it  seem a little strange that  the CEO of JPMorgan is stating that the fact that they approved loans loans that didn’t meet the FHA requirements but they wrote them anyway  to boost their bottom line – got caught – paid over a 1/2 billion dollars in fines is somehow the FHA’s fault. As for as to not offering any more FHA guaranteed loans that wont happen. For a more detailed look at this subject – please read the article below.

The FHA Condos Approval Company, Inc.

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In a conference call with analysts following the release of its second quarter earnings report Tuesday, JPMorgan CEO Jamie Dimon took the time to single out Federal Housing Administration (FHA) backed lending as a source of risk for the Megabank.

In February, the bank announced that it would pay $614 million to settle claims that it had improperly approved thousands of government backed mortgages, including those approved by the bank as a participant in the FHA’s Direct Endorsement Lender program.

Under the program, lenders who have direct endorsement power can consider single-family FHA mortgage applications without first submitting paperwork to HUD. Skipping that step allows FHA mortgages to be processed as rapidly as other mortgages.

Dimon said that the bank’s FHA business has cost them money.

“So the real question is should we be in the FHA business at all? We’re still struggling with that,” Dimon said. “Until they come up with some kind of safe harbors or something, we’re going to be very, very cautious in that line of business,” Dimon said.

JPMorgan is not alone in its struggle with FHA compliance. In June, Suntrust Banks, Inc. announced that it would pay $418 million to resolve its potential liability for originating and underwriting FHA loans between January 2006 and March 2012 that did not meet agency requirements.

To read the complete article – please use the link below.

Wary of FHA Business

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