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Chase Boosts Mortgage Originations 35% in Third Quarter

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RISMEDIA, Nov. 2, 2007-Chase announced that it originated $39.2 billion in mortgages in the third quarter, ending Sept. 30 — up 35% from a year earlier — as it helps fill consumers’ need for home loans. For the first nine months of 2007, Chase’s originations are up 33.6% to $119 billion.

According to the company, that’s good news for consumers as the mortgage industry continues to retrench and fewer options exist for obtaining or refinancing a mortgage.

“At Chase, making mortgages is a key business,” said David Lowman, CEO of JPMorgan Chase’s Home Lending business. “We are using our financial strength to lend to qualified borrowers as they seek the American Dream of homeownership. We are remaining disciplined in our underwriting to make home loans that borrowers can afford today – and for the long term.”

The company says that Chase’s increased lending – and competitors’ pullbacks – boosted Chase’s market share of mortgages and home equity to 9% in the third quarter, up dramatically from 5.7% a year earlier, according to Inside Mortgage Finance. Chase recorded the largest market-share increase of any Top 10 lender.

Chase is able to originate a wide range of mortgages and home equity products because it has the flexibility to fund the loans directly rather than relying solely on the secondary market. Chase is supported by the financial strength, capital and liquidity of JPMorgan Chase, which has $1.5 trillion in assets and $120 billion of stockholders equity.

Typically, many lenders bundle together a number of similar mortgages to sell to investors in the secondary market. That replenishes money available to make more mortgages. Investors have continued to purchase pools of mortgages of less than $417,000 fitting certain criteria established by Fannie Mae and Freddie Mac, the key government sponsored enterprises created for this purpose. But investors have been hesitant to purchase pools of jumbo (larger than $417,000), Alt-A and other non-prime mortgages, forcing many lenders to reduce or eliminate their origination of certain non-conforming loans.

That has created opportunities for financially strong companies such as Chase to continue to expand their businesses to meet consumer needs, particularly those needing jumbo loans.

During the last year, Chase has increased its mortgage sales force to more than 5,000.

It also has made a number of changes to help borrowers understand and sustain homeownership, including:

- Developing a new upfront disclosure in a simple format. Consumers now can compare important product features for traditional as well as non-traditional mortgages, including more information on how an adjustable-rate feature can affect the monthly payment.
- Rewarding consumers who complete a mortgage counseling class through an approved nonprofit counseling organization with a discount on mortgage insurance premiums (often required with a down payment of less than 20%).
- Distributing a homeowner education CD in English or Spanish to provide purchasers home-buying tips.
- Tightening credit standards, such as making adjustments to acknowledge declining home values in certain markets and reducing the use of high loan-to-value ratios and stated-income products.
- Employing underwriting guidelines that require borrowers to demonstrate their ability to handle increases in interest rates on non-traditional mortgages.
- Requiring an initial fixed rate for at least five years on adjustable-rate mortgages for non-prime borrowers to reduce payment shock risk.

For more information, visit www.chase.com.

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