JPMorgan Chase Bank, N.A. -- Moody's affirms JPMorgan Chase Bank, N.A.'s prime jumbo originator assessment as Above Average
Announcement: Moody's affirms JPMorgan Chase Bank, N.A.'s prime jumbo originator assessment as Above Average
Global Credit Research - 14 Dec 2020
New York, December 14, 2020 -- Moody's Investors Service (Moody's) has affirmed JPMorgan Chase Bank, N.A.'s (Chase) prime jumbo residential mortgage originator assessment as Above Average.
Headquartered in New York, NY, JPMorgan Chase & Co. (NYSE: JPM), the parent company of Chase, is a systemically important US bank. The company operates through different lines of business, of which activities related to mortgage banking fall under the Consumer & Community Banking division. JPM is a leading issuer and arranger in multiple asset classes. The company produces research across multiple securitization platforms and also provides advisory services.
In our previous review, we noted concerns on the low percentage of loans which were reviewed from Chase's jumbo delegated correspondent channel. Since our last review, all loans from Chase's jumbo delegated correspondent channel are now being reviewed by either a third party review firm or by Chase.
ASSESSMENT RATIONALE
Our assessment of Chase's practices for prime jumbo residential mortgage loans is Above Average. Chase's assessment for underwriting practices increased from Average to Above Average. All jumbo loans from Chase's delegated correspondent channel are now reviewed by a third party firm or Chase. Chase has a seasoned team and an effective underwriter training program. Our assessment of Chase's property valuation policies and procedures continues to be Above Average. Chase has solid appraisal valuation policies and all appraisals from its delegated correspondent channel are required to have a secondary review.
Early loan performance continues to be Strong due to low early payment defaults and minimal repurchase requests during the 18 month review period ending 30 June 2020.
We continue to assess Chase's credit risk management as Strong due to its sophisticated risk management process and solid feedback mechanisms.
Sales and marketing practices continue to be Strong driven by the company's strong marketing oversight and clear separation between sales and loan approval personnel.
We continue to view the company's closing practices as Strong. Chase has solid closing policies and procedures with built-in checks to ensure that loans are closed in a consistent manner from all channels.
Our assessment of Chase's financial strength continues to be Strong based mainly on the financial strength and stability of Chase's parent company JPMorgan Chase & Co. which is a systemically important, diversified bank with solid capital levels.
Management and staffing continues to be assessed as Average due the seasoned management team and solid training curriculum.
We continue to assess Chase's oversight function as Average. Chase has strong firm-wide controls, formal corporate audits, and an effective underwriter quality control program. Chase has high litigation exposure which is somewhat mitigated by the oversight provided by Chase's audit and compliance teams.
We assess Chase's legal and compliance practices as Above Average due to its large dedicated compliance and legal team. Chase's continues to be subject to a high level of regulatory scrutiny.
Our assessment of Chase's technology continues to be Above Average due to Chase's solid third party technology oversight, and acceptable disaster recovery system.
The framework used in this analysis was "Originator Assessments for Residential Mortgage Loans" published in December 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1122178. Alternatively, please see the Framework list at https://www.moodys.com/research/List-of-NCRA-Frameworks--PBC_1178235 for a copy of this framework.
Please see www.moodys.com for any updates on changes to the lead analyst and to the Moody's legal entity that has issued the assessment.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.
Lima Ekram Vice President - Senior Analyst Structured Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 William Fricke VP - Senior Credit Officer Structured Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653
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