JPMorgan Chase Hit with Huge Legal Expenses, Waning Mortgage Business

JPMorgan Chase Hit with Huge Legal Expenses, Waning Mortgage BusinessJPMorgan Chase’s climbing legal expenses — the nation’s largest bank set aside $9.2 billion to deal with regulators and other authorities — has led to the bank’s first quarterly loss under Chief Executive Jamie Dimon.
JPMorgan’s third-quarter loss came in at $380 million, or 17 cents a share, compared with a profit of $5.71 billion, or $1.40, a year earlier, Chase said.
The bank said in August that its mortgage-bond sales practices were being investigated by U.S. prosecutors in California. The bank had been discussing a potential $11 billion deal with state and federal authorities to settle that case, and other related investigations, Bloomberg reports.
Adding to JPMorgan’s legal troubles is a weaker mortgage market.
Rising interest rates have lowered the value of big banks’ bond holdings and reduced mortgage-fee revenue for the largest home lenders, such as JPMorgan and Wells Fargo, which reported a 13 percent profit increase Friday.
Mortgage fees and related revenue at JPMorgan plunged 65 percent to $839 million in the third quarter, compared with $2.38 billion a year earlier.
Mortgage production pretax income was $90 million, a decrease of $997 million from the prior year, reflecting lower volumes and lower margins.
“While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters,” Dimon said in a statement.

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