Foreclosure talk eclipses JPMorgan profits
Earnings up 23% as bank girds for scrutiny of policy
NEW YORK — The last thing that top executives at JPMorgan Chase & Co. wanted to talk about yesterday was the raging foreclosure mess.
“We’re not going to say too much about this today, other than the comments that we’re giving you here,’’ chief financial officer Douglas Braunstein said on a conference call to discuss the company’s earnings.
That was wishful thinking.
Instead, analysts and investors wanted answers from Braunstein and chief executive Jamie Dimon on the rapidly escalating foreclosure fiasco, which overshadowed an otherwise strong earnings report from the nation’s second-largest bank. JPMorgan’s profits increased 23 percent to $4.42 billion.
JPMorgan’s earnings came out on the same day that officials from all 50 states announced a joint investigation into accusations that lenders used flawed documents to foreclose on thousands of homeowners. JPMorgan, a big player in the mortgage market, said it was expanding its review of foreclosures from 23 to 41 states, and doubling the amount of cases under review to 115,000.
“We’re not evicting people who deserve to stay in the house,’’ Dimon said, adding he was hopeful that it would take three to four weeks for his bank to get the foreclosure process back on track. He worried that “if it went on for a long period of time, it will have a lot of consequences, most of which would be adverse on everybody.’’
The latest crisis comes just as the anger over the US bailout of large banks was fading. The accusations of shoddy work and document fraud on thousands of foreclosures that led to people being evicted from their homes puts banks back on the hot seat.
JPMorgan Chase, Bank of America Corp., and GMAC, recently halted foreclosures in multiple states after evidence emerged of fraud in the documentation process.
Though Dimon brushed it aside, at least two analysts expressed concern over the $1.3 billion increase in JPMorgan Chase’s litigation reserve to fight lawsuits, including those for mortgage-related matters.
In its third quarter, JPMorgan Chase posted a 23 percent gain in net income, mostly because it set aside less money to cover bad loan losses. Revenue fell 15 percent to $24.3 billion in a sign that tighter regulations and a sluggish economy are taking a toll.