Mortgage Observer

What Happens if J.P. Morgan Shuns the FHA?

Jamie Dimon, chairman and CEO of J.P. Morgan

Earlier this week, straight-talking J.P. Morgan chairman and CEO Jamie Dimon vented his frustration on an earnings call, threatening to stop doing all mortgage business with the Federal Housing Administration, which insures many loans originated and securitized by his bank.

Mr. Dimon expressed his reticence—asking rhetorically “should [J.P. Morgan] be in the FHA business at all?”—following $600 million in fines recently levied against his firm for making defective loans. That punitive fine invoked so-called triple damages, wherein the bank owes three times as much as the value of the bad loans.  Read More

Mortgage Observer

Challenges at the Federal Housing Administration Were Forseen

With few exceptions, news on the housing front has been overwhelmingly positive in recent months. In spite of weak employment trends, historically low mortgage rates and the plodding but inexorable rebalancing of supply and demand have combined to lift sales volumes, prices and perceptions of a housing recovery.

But a rising tide does not relegate housing to a lower rung on the policy ladder. As conditions improve, policymakers will be obliged to address the long-term role of government in promoting specific housing outcomes. Since the government embarked on the conservatorship of Fannie Mae and Freddie Mac more than four years ago, the immediate goal of resuscitating the housing market has taken precedence over the larger question of how policy goals have supported—and undermined—the sustainability of the sector. Read More